Merchandise Purchase Budget
Budgeted Income Statement
BBA | BBA-BI
The Nepal Ware House Pvt.Ltd. has collected the following information to prepare Master Budget.
|Equities and Liabilities||Rs.||Assets||Rs.|
|10% debenture||20000||Account receivable:|
|November sales 16000|
|Retained earnings||26000||Cash at bank||20000|
Sales would be 20% in cash and 80% on credit. Credit sales would be realized 50% in the month of sales, 30% in the next month; 20% in the following next month of sales. All expenses including purchases would be paid in the same month of expenses and purchases. Gross profit margin would be 50% on sales and administrative and distribution expenses would be 10% of gross sales.
Sufficient merchandise inventory would be maintained to meet next month’s sales need. The company would desire to have minimum cash balance of Rs.20000. The 10% debenture would retire on January 1st,2014 and payable at a premium of 10%.Short term loan in a multiple of Rs.10000 would be available at on interest rate of 10% p.a to meet cash deficiency.Repayment of bank loan would be in a multiple of Rs. 1000. The interest will be paid at the time or repayment on the amount of loan.
a) Merchandise purchase budget for the first three month.
b) Cash collection and disbursement budget for the first three month.
c) Budgeted income statement and balance sheet at the end of March 31st 2014.
a. Merchandise Purchase Budget
|Details||Merchandise Need||Ending Inventory||Total Need||Beginning Inventory||Purchase|
b. Cash Budget
|Beginning Balance of Cash||20000||20000||46666.67|
|Add:||Cash Receipts and Collection|
|Collection from same month sales||80000||120000||140000|
|Collection from previous month sales||36000||48000||72000|
|Collection from previous two month sales||16000||24000||32000|
|Total Cah Receipt||172000||252000||314000|
|Total Cash Available||192000||272000||360666.67|
|Less:||Cash Payment/ Needed|
|Payment of Accounts Payable||150000||175000||150000|
|Admin and distribution expenses||20,000||30000||35000|
|Redemption of debenture with premium||22000|
|Total Cash Payment||192,000||205,000||185,000|
|Minimum Cash Balance||20000||20000||20000|
|Total Cash Needed||212,000||225,000||205,000|
|Ending Balance of Cash||20000||46666.67||175,666.67|
c. Income Statement
|Sales Revenue(3months ie; Jan+Feb+Mar)||850000|
|Less:||Cost of Goods Sold|
|Less:||Operating and other expenses|
|Premium on debenture||2000||87333.333|
|Net Profit Before Tax||337666.667|
c. Balance Sheet
|Inventory of Merchandise||150000|
|Liabilities and Owners’ Equity||Amount(Rs)|
|Total Liabilities and Owners’ Equity||513666.67|