The purpose of this problem is to demonstrate some of theinterrelationships in the budgeting process. Shown below is a verysimple balance sheet at January 1, along with a simple budgetedincome statement for the month. (Assume dollar amounts are statedin thousands; you also may state dollar amounts in thismanner.)
NUTSHELL BALANCE SHEET JANUARY 1
Cash- $40 Accounts Payable- $30
Accounts Receivable- 120 Owner`s Equity- 180
Inventory- 50 Total- 210
Total- 210
NUTSHELL BUDGETED INCOME STATEMENT FOR JANUARY
Sales . . . . . . . . . . . . . . . $100
COGS ...............................60
Gross Profit .........................40
Expenses ........................25
Net Income ................... 15
As Nutshell has no plant assets, there is no depreciation expense.Prepare a cash budget for Janu- ary and a budgeted balance sheet asof January 31.
These budgets are to reflect your own assumptions as to the amountsof cash and credit sales, collections of receivables, purchases ofinventory, and payments to suppliers. We require only that the cashbalance be $50 at January 31, that receivables and inventory changefrom the January 1 levels, and that the company engage in noâfinancingâ or âinvestingâ activities (as these terms are used in astatement of cash flows).
Clearly state your assumptions as part of your solution, and beprepared to explain in class how they result in the amounts shownin your budgets
The purpose of this problem is to demonstrate some of theinterrelationships in the budgeting process. Shown below is a verysimple balance sheet at January 1, along with a simple budgetedincome statement for the month. (Assume dollar amounts are statedin thousands; you also may state dollar amounts in thismanner.)
NUTSHELL BALANCE SHEET JANUARY 1
Cash- $40 Accounts Payable- $30
Accounts Receivable- 120 Owner`s Equity- 180
Inventory- 50 Total- 210
Total- 210
NUTSHELL BUDGETED INCOME STATEMENT FOR JANUARY
Sales . . . . . . . . . . . . . . . $100
COGS ...............................60
Gross Profit .........................40
Expenses ........................25
Net Income ................... 15
As Nutshell has no plant assets, there is no depreciation expense.Prepare a cash budget for Janu- ary and a budgeted balance sheet asof January 31.
These budgets are to reflect your own assumptions as to the amountsof cash and credit sales, collections of receivables, purchases ofinventory, and payments to suppliers. We require only that the cashbalance be $50 at January 31, that receivables and inventory changefrom the January 1 levels, and that the company engage in noâfinancingâ or âinvestingâ activities (as these terms are used in astatement of cash flows).
Clearly state your assumptions as part of your solution, and beprepared to explain in class how they result in the amounts shownin your budgets