Kristan Division of KML has been requested to prepare a quarterly budgeted income statement for 2021. The regional manager expects that sales in the first quarter of 2021 will increase in volume by 10% over the same quarter of the preceding year and will then increase by 5% for each succeeding quarter in 2021. The corporate head office has requested that the regional manager maintain an inventory in pesos equal to 16% of the next quarter's sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2020, is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows: Rent expense P4,400 Depreciation on office equipment P2,000 Utilities expense P1,800 Miscellaneous expenses 2% of sales The income statement information for the first quarter of 2020 was as follows: Sales P150,000 Cost of goods sold 66,000 The December 31, 2021, balance sheet accounts include the following balances: Cash 26,000 Marketable Securities 27,894 Equipment 127,000 Accumulated Depreciation 52,000 Common Stock 68,000 Retained Earnings 21,000. Accounts receivable at December 31, 2021 are expected to be 8% of annual sales. 20% of the ending inventory is expected to have not yet been paid at December 31, 2021 Requirements: Prepare a budgeted quarterly income statement and balance sheet for the first quarter of 202
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Kristan Division of KML has been requested to prepare a quarterly
The corporate head office has requested that the regional manager maintain an inventory in pesos equal to 16% of the next quarter's sales. Quarterly purchases average 45% of quarterly sales. Budgeted ending inventory on December 31, 2020, is P8,000. Quarterly salaries are P7,200 plus 10% of sales. All salaries are classified as sales salaries. Other quarterly expenses are estimated to be as follows:
Rent expense P4,400
Utilities expense P1,800
Miscellaneous expenses 2% of sales
The income statement information for the first quarter of 2020 was as follows:
Sales P150,000
Cost of goods sold 66,000
The December 31, 2021, balance sheet accounts include the following balances:
Cash 26,000
Marketable Securities 27,894
Equipment 127,000
Common Stock 68,000
Retained Earnings 21,000.
Accounts receivable at December 31, 2021 are expected to be 8% of annual sales.
20% of the ending inventory is expected to have not yet been paid at December 31, 2021
Requirements:
Prepare a budgeted quarterly income statement and balance sheet for the first quarter of 202
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