Global Electronics’ cost of goods sold generally runs at 70% ofsales. Inventory is purchased on account, and 40% of each month’spurchases are paid during the month of purchase. The remainder ispaid during the following month. In order to have adequate stocksof inventoryo hand, the firm attempts to have inventory at the endof each monthequal to half of the next month’s projected costofgoods sold.
Projected sales for Dec of 20×0 are $800,000. Credit sales aretypically 75% of total sales. Global credit experience indicatesthat 10% of credit sales are collected during the month of sale ,and the remainders are collected during the follwoing month.
Projected Sales
Percentages
$ 800,000.00
Credit Sales (75% of sales)
75%
Collections during month of sale (10%) ofsales
10%
Cost of Goods Sold (70% of sales)
70%
Sales Salaries
$ 42,000.00
Advertising and Promotion
$ 32,000.00
Administratice Salaries
$ 42,000.00
Depreciation
$ 50,000.00
Interest on Bonds (Paid semi-annuallyJanuary 31 and July 31)
$ 5,000.00
Property Taxes Paid Semi-annually onFebruary 28 and August 31)
$ 1,800.00
Sales Commissions (1% of sales)
1%
Find the sales budget as follow
Global Electronics
Percentages
December 20×0
January 20×1
February 20×1
March 20×1
1st Quarter 20×1
Total Sales
Cash Sales
Sales on Account
Find the Cash Receipts Budget as follow
Global Electronics
Percentages
January 20×1
February 20×1
March 20×1
1st Quarter 20×1
Cash Sales
Cash collections from credit sales madeduring the current month
Cash collections from credit sales madeduring the preceding month
Total cash receipts
Find the Purchases Budget as follow
Global Electronics
Percentages
January 20×1
February 20×1
March 20×1
1st Quarter 20×1
Cash Sales
Cash collections from credit sales madeduring the current month
Cash collections from credit sales madeduring the preceding month
Total cash receipts
Find the Cash Disbursement Budget as follow
January 20×1
February 20×1
March 20×1
1st Quarter 20×1
Inventory purchases
Cash payments for purchases during thecurrent month
Cash payments for purchases during thepreceding month
Total cash payments for inventorypurchases
Other expenses
Sales Salaries
Advertising and promotion
Administrative salaries
Interest on bonds
Property taxes
Sales commissions
Total cash payments for otherexpenses
Total cash disbursements
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