Professor Jozsi ACC 3211 Master Budget Take-Home Fall, 2022
Per Florida Southern College Honor Code, I attest that the work is my own – not in collaboration or assistance from others.
Signature: ____________________________________________
The following is known for Unforgettable Trinkets (UT), Inc:
The total sales for June were $124,000. Expected sales are $150,000 in July and $136,000 in August.
Budgeted credit sales are 80%. The remainder are cash sales.
Of the credit sales, 74% are collected in the same month and 22% in the next month. The rest are uncollectible.
UT anticipates that 40% of the customers who pay for credit sales in the same month will take advantage of the 1% discount offered for payment of credit sales in the same month.
The desired ending inventory is 15% of next month’s sales in units at the end of each month.
The gross margin percentage is 38%.
All inventory purchases are on credit. Payments to suppliers are: 66% in same month and the remaining 34% in the following month. UT takes advantage of the 2% discount offered by suppliers on same month payments.
Total monthly fixed selling and administrative costs are $25,000; of this amount, depreciation expense is $9,000
UT pays all cash expenses in the month incurred.
UT expects variable selling/shipping costs of $1.85 per unit and pays them in the month incurred.
UT anticipates the unit sales price to be $16 per unit from June through August.
UT plans to buy a small parcel of land in July for $19,000.
The cash balance of July 1 was $37,000.
UT is expected to earn the balance of June 30th Unearned Revenue collected in June for $14,000.
In July, UT is expected to declare $4,000 of cash dividends and pay for the $6,000 declared in June.
Required: Please use Excel to support your work. Label answers clearly.
a. What were June purchases and what are expected July purchases?
b. What is the budgeted July income before taxes?
c. What are budgeted July total cash collections?
d. What are budgeted July payments to suppliers?
e. What is the budgeted cash balance on July 31?
f. What is the budgeted balance of Accounts Receivable on July 31?
g. What is the budgeted balance of Accounts Payable on July 31?
Assume the following changes to the original data: June sales were instead $118,000, expected sales are $155,000 for July and $140,000 for August, and expected gross margin is 35%. Expected collections of credit sales are 65% for the same month and 30% from previous month; 5% are expected to be uncollectible. Repeat “a through e” requirements.
Discuss five other information/questions that you would consider relevant for the July budget.
