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Nordic Company a merchandising company, prepares its master budget on a quarterly basis The following data have been assembled to assist in preparation of the master budget for the second quarter

Nordic Company, a merchandising company, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter.

a.

As of March 31 (the end of the prior quarter), the companyAc€?cs balance sheet showed the following account balances:

         
  Cash $ 9,500         
  Accounts receivable   51,200         
  Inventory   13,140         
  Buildings and equipment (net)   221,300         
  Accounts payable     $ 20,010    
  Capital stock       190,000    
  Retained earnings       85,130    
     
  $ 295,140      $ 295,140    
     
 
b. Actual sales for March and budgeted sales for AprilAc€?oJuly are as follows:
   
  March (actual) $64,000   
  April $73,000   
  May $83,000   
  June $93,000   
  July $54,000   
 
c.

Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales.

d. The companyAc€?cs gross margin percentage is 40% of sales. (In other words, cost of goods sold is 60% of sales.)
e.

Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $8,200 per month; shipping, 5% of sales; advertising, $6,000 per month; other expenses, 5% of sales. Depreciation, including depreciation on new assets acquired during the quarter, will be $6,100 for the quarter.

f. Each monthAc€?cs ending inventory should equal 30% of the following monthAc€?cs cost of goods sold.
g.

Half of a monthAc€?cs inventory purchases are paid for in the month of purchase and half in the following month.

h.

Equipment purchases during the quarter will be as follows: April, $12,200; and May, $4,000.

i. Dividends totaling $1,600 will be declared and paid in June.
j.

Management wants to maintain a minimum cash balance of $8,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter.

Required:
Using the data above, complete the following statements and schedules for the second quarter:
1. Schedule of expected cash collections: (Omit the "$" sign in your response.)
Schedule of expected cash collections
  April May June Total
  Cash sales $ 14,600      $     $     $    
  Credit sales 51,200                 
   
  Total collections $ 65,800      $     $     $    
   
 

 

2a.

Merchandise purchases budget. (Input all amounts as positive values. Omit the "$" sign in your response.)

Merchandise purchases budget
  April   May June Total
  Budgeted cost of goods sold $ 43,800 * $ 49,800     $     $    
  (Click to select)AddDeduct: desired ending inventory 14,940 Ac€             
     
  Total needs 58,740              
  (Click to select)DeductAdd: beginning inventory 13,140              
     
  Required purchases $ 45,600   $     $     $    
     
 
*$73,000sales Af— 60% = $43,800.
Ac€ $49,800 Af— 30% = $14,940.
2b.

Schedule of expected cash disbursements for merchandise purchases: (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Schedule of cash disbursements for purchases
  April May June Total
  For March purchases $ 20,010   $   $   $ 20,010
  For April purchases 22,800 22,800   45,600
  For May purchases         
  For June purchases         
   
  Total cash disbursements
     for purchases
$ 42,810 $   $   $  
   
 
3.

Schedule of expected cash disbursements for selling and administrative expenses: (Omit the "$" sign in your response.)

Schedule of cash disbursements for selling and administrative expenses
  April May June Total
  Salaries and wages $ 8,200      $   $    $  
  Shipping 3,650           
  Advertising 6,000           
  Other expenses 3,650           
   
  Total cash disbursements for selling
  and administrative expenses
$21,500      $   $   $  
   
 
4.

Cash budget. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.)

Nordic Company
Cash budget
  April May June Total
  Cash balance, beginning $ 9,500     $    $    $   
  Add cash collections 65,800             
   
  Total cash available 75,300             
   
  Less cash disbursements:         
     For inventory purchases 42,810             
     For selling and administrative expenses 21,500             
     For equipment purchases 12,200             
     For dividends             
   
  Total cash disbursements 76,510             
   
  Excess (deficiency) of cash (1,210)             
   
  Financing:        
     Borrowings             
     Repayments             
     Interest             
   
  Total financing             
   
  Cash balance, ending $     $    $    $   
   
 
5.

Prepare an absorption costing income statement for the quarter ending June 30. (Input all amounts as positive values. Omit the "$" sign in your response.)

Nordic Company
Income Statement
For the Quarter Ended June 30
  (Click to select)Ending inventorySalesGoods available for saleAdvertisingGross marginNet operating income (loss)Beginning inventoryDepreciation   $  
  Cost of goods sold:    
       (Click to select)AdvertisingGoods available for saleNet operating income (loss)SalesDepreciationEnding inventoryBeginning inventoryGross margin $    
       (Click to select)Goods available for salesGross marginSalesDepreciationNet income (loss)PurchasesNet operating income (loss)Ending inventory    
     
       (Click to select)Net operating income (loss)Beginning inventoryGross marginPurchasesAdvertisingDepreciationNet income (loss)Goods available for sale    
       (Click to select)Gross marginBeginning inventoryAdvertisingNet operating income (loss)SalesEnding inventoryDepreciationPurchases    
   
  (Click to select)Net operating income (loss)Beginning inventoryGross marginSalesNet income (loss)AdvertisingEnding inventoryGoods available for sale    
  Selling and administrative expenses:    
       (Click to select)AdvertisingOther expensesNet operating income (loss)ShippingGoods available for saleGross marginSalaries and wagesDepreciation    
       (Click to select)ShippingGoods available for saleDepreciationNet operating income (loss)Salaries and wagesGross marginAdvertisingOther expenses    
       (Click to select)Goods available for saleSalaries and wagesAdvertisingGross marginDepreciationOther expensesShippingNet operating income (loss)    
       (Click to select)AdvertisingOther expensesGross marginGoods available for saleDepreciationShippingNet operating income (loss)Salaries and wages    
       (Click to select)AdvertisingOther expensesGoods available for saleShippingGross marginNet operating income (loss)Salaries and wagesDepreciation    
   
  (Click to select)Net operating income (loss)AdvertisingGoods available for salePurchasesGross marginEnding inventorySalesBeginning inventory    
  (Click to select)Interest expenseEnding inventoryCost of goods manufacturedGross marginNet operating income (loss)SalesBeginning inventoryAdvertising    
     
  (Click to select)PurchasesGoods available for saleEnding inventoryAdvertisingBeginning inventoryNet income (loss)Gross marginSales   $  
     
 
6.

Prepare a balance sheet as of June 30. (Be sure to list the assets and liabilities in order of their liquidity. Omit the "$" sign in your response.)

Nordic Company
Balance Sheet
June 30
Assets
  Current assets:    
       (Click to select)Buildings and equipment, netCashAccounts receivableAccounts payableInventory   $  
       (Click to select)Accounts payableInventoryCashAccounts receivableBuildings and equipment, net    
       (Click to select)Accounts payableInventoryBuildings and equipment, netAccounts receivableCash    
     
  Total current assets    
  (Click to select)InventoryAccounts receivableAccounts payableBuildings and equipment, netCash    
     
Total assets   $  
     
Liabilities and StockholdersAc€?c Equity
  Current liabilities:    
  (Click to select)Accounts payableCashCapital stockBank loan payableAccounts receivable   $  
  Stockholders' equity:    
       (Click to select)CashAccounts receivableAccounts payableInventoryCapital stock $    
       (Click to select)CashInventoryAccounts payableRetained earningsAccounts receivable    
     
  Total liabilities and stockholdersAc€?c equity

Jun 23 2020 View more View Less

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