Reference no: EM132656277
1. Picanuy Corporation has collected the following information to prepare master budget.
Balance sheet on January 1. 2015
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Liability and Capital
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Assets
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Equity
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150.000
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Equipment
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20.000
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10% Debenture
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20.000
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Merchandise Inventory
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100000
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Tax Payable
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20000
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Accounts Receivable
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|
Retained Earnings
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26.000
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November 516.000
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December $60,000
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76,000
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Cash
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20,000
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Total
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216,000
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Total
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216,000
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Sales would be 20% in cash and 80% on credit. Credit would be realizing 50% in the month of sales. 30% in the next month; 16% in next two months after date of sales and bad debts would be 4%. All expenses including purchase would be paid in the same month of expenses and purchase. Gross profit margin would be 50% on sales and administrative and distribution expenses would be 10% of gross sales.
Sufficient merchandise inventory would be maintained to meet next month's sales needs. The company desires to have a minimum cash balance of $20,000. The 10% debenture would retire on January 1st and payable at premium of 10%. Government policy required to pay tax on income semiannually, e.g., in the month ending of March $15,000 and on the same date acquire a new equipment of $50,000. Applied rate of depreciation is 20% reducing balance method.
A line of credit in a multiple of $10,000 at an interest rate of 12% would be available to meet cash shortage and repayment would be in $1,000 with the interest on principal repaid.
Required:
Question 1: Merchandise purchase budget for three month ending march
Question 2: Cash budget for three month ending march
Question 3: Income statement for three month ending march
Question 4: Balance sheet as of March