Budgeted Income Statement of Cravat Sales Company

Case 9-23 1.
a.
Sales budget:
April
May
June
Quarter

Budgeted sales in units
35,000
45,000
60,000
140,000

Selling price per unit × $8 × $8 × $8 × $8

Total sales
$280,000
$360,000
$480,000
$1,120,000

b.
Schedule of expected cash collections:

February sales
$ 48,000

$ 48,000

March sales
112,000
$ 56,000

168,000

April sales
70,000
140,000
$ 70,000
280,000

May sales

90,000
180,000
270,000

June sales

120,000 120,000

Total cash collections
$230,000
$286,000
$370,000
$ 886,000

c.
Merchandise purchases budget:

Budgeted sales in units
35,000
45,000
60,000
140,000

Add budgeted ending inventory* 40,500 54,000 36,000 36,000

Total needs
75,500
99,000
96,000
176,000

Less beginning inventory 31,500 40,500 54,000 31,500

Required unit purchases 44,000
58,500
42,000
144,500

Unit cost × $5 × $5 × $5 × $5

Required dollar purchases
$220,000
$292,500
$210,000
$ 722,500

*90% of the next month’s sales in units.

d.
Budgeted cash disbursements for merchandise purchases:

April
May
June
Quarter

March purchases
$ 85,750

$ 85,750

April purchases
110,000
$110,000

220,000

May purchases

146,250
$146,250
292,500

June purchases

105,000 105,000

Total cash disbursements
$195,750
$256,250
$251,250
$ 703,250

2.
Cravat Sales Company

Cash Budget

For the Three Months Ending June 30

April
May
June
Quarter
Cash balance, beginning
$ 14,000
$ 10,250
$ 10,000
$ 14,000
Add receipts from customers (Part 1 b.) 230,000 286,000 370,000 886,000
Total cash available 244,000 296,250 380,000 900,000
Less