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Chapter 22: 10SE (page 1230)

Preparing a financial budget鈥攕chedule of cash payments

Barnes Company budgeted direct materials purchases of \(191,990 in January and \)138,610 in February. Assume Barnes pays for direct materials purchases 60% in the month of purchase and 40% in the month after purchase. The Accounts Payable balance on January 1 is $75,000. Prepare a schedule of cash payments for purchases for January and February. Round to the nearest dollar.

Short Answer

Expert verified

The total cash paid for purchases is $190,194 and $159,962 for January and February respectively.

Step by step solution

01

Meaning of financial budget

A financial budget is a detail record of the expenses and the revenues.

02

Schedule of cash receipts from customers

Particulars

January

February

Total budgeted purchases

$191,990

$138,610

Cash receipts from customers

Cash received in the month of purchases (60%)

$115,194

$83,166

Cash received in the month after purchases (40%)

$75,000

$76,796

Total cash payments for purchases

$190,194

$159,962

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Most popular questions from this chapter

Why is the sales budget considered the cornerstone of the master budget?

Understanding the components of the master budgetThe following are some of the components included in the master budget of amerchandising company.

a. Budgeted balance sheet

b. Sales budget

c. Capital expenditures budget

d. Budgeted income statement

e. Cash budget

f. Inventory, purchases, and cost of goods sold budget

g. Selling and administrative expense budget

List the items of the master budget in order of preparation.

Preparing an operating budget鈥攄irect labor budget Baker Company expects to produce 2,050 units in January and 1,994 units in February. Baker budgets five direct labor hours per unit. Direct labor costs average $9 per hour. Prepare Baker鈥檚 direct labor budget for January and February.

Preparing an operating budget鈥攎anufacturing overhead budget Bennett Company expects to produce 2,030 units in January that will require 8,120 hours of direct labor and 2,210 units in February that will require 8,840 hours of direct labor. Bennett budgets \(10 per unit for variable manufacturing overhead; \)2,100 per month for depre000ciation; and $78,460 per month for other fixed manufacturing overhead costs. Prepare Bennett鈥檚 manufacturing overhead budget for January and February, including the predetermined overhead allocation rate using direct labor hours as the allocation base.

Using Excel for to prepare an operating budeget (manufacturing company)

Download an Excel template for this problem online in MyAccountingLab or athttp://www.pearsonhighered.com/Horngren.

Thunder Creek Company is preparing budgets for the first quarter of 2018. All relevant information is presented on the Excel template.

Requirements

1. Prepare a Sales Budget.

2. Prepare a Production Budget.

3. Prepare a Direct Materials Budget.

4. Prepare a Direct Labor Budget.

5. Prepare a Manufacturing Overhead Budget.

6. Prepare a Cost of Goods Sold Budget

7. Prepare a Selling and Administrative Expense Budget.

See all solutions

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