Acc206 Principles of Accounting: P22-22A Thumbtack's March 31, 2012, budgeted balance sheet

Acc206 Principles of Accounting

P22-22A Preparing an operating budget
Thumbtack's March 31, 2012, budgeted balance sheet follows:
Thumbtack Office Supply
Budgeted Balance Sheet
March 31, 2012
Assets Liabilities
Current Assets: Current Liabilities:
Cash 18,000 Accounts Payable 12,500
Accounts receivable 12,000 Salary and commissions payable 1,400
Inventory 16,000 Total liabilities 13,900
Prepaid Insurance 2,200
Total current assets 48,200 Stockholders' Equity
Common stock 16,000
Plant assets: Retained earnings 33,300
Equipment and fixtures 45,000 Total stockholders' equity 49,300
Less: Accumulated depreciation 30,000
Total plant assets 15,000
Total Assets $63,200 Total liabilities & Stockholders' Equity $63,200

The budget committee of Thumbtack Office Supply has assembled the following data:
a. Sales in April were $40,000. You forecast that monthly sales will increase 2% over April's sales in May. June's sales will increase 4% over April's sales. July's sales will increase 20% over April's sales. Collections are 80% in the month of sale and 20% in the month following sale.
b. Thumbtack maintains inventory of $11,000 plus 25% of the COGS budgeted for the following month. COGS = 50% of sales revenue. Purchases are paid 30% in the month of purchase and 70% in the month following the purchase.
c. Monthly salaries amount to $7,000. Sales commissions equal 5% of sales for that month. Salaries and commissions are paid 30% in the month incurred and 70% in the following month.
d. Other monthly expenses are as follows:
Rent expense 2,400 paid as incurred
Depreciation expense 200
Insurance expense 100 expiration of prepaid amount
Income tax 20% of operating income, paid as incurred

1. Prepare Thumbtack's sales budget for April and May, 2012. Round all amounts to the nearest $1.
2. Prepare Thumbtack's inventory, purchases, and cost of goods sold budget for April and May.
3. Prepare Thumbtack's operating expenses budget for April and May.
4. Prepare Thumbtack's budgeted income statement for April and May.
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