Reference no: EM132575068

Hilton Corporation is preparing the budget for next month (November). Balance sheet as on 31st October is given below

Assets Rs.

Cash 69000

Accounts receivable 58000

Inventory 63000

Equipment 189000

Total Assets 379000

Liabilities and Stockholder's Equity

Accounts Payable 48500

Interest Payable 12000

Loan from Bank 80000

Common stock 100000

Retained earnings 138500

Total Liabilities and Stockholder's Equity 379000

Estimated sales for the month of November and December are Rs.500000 and Rs.450000

25% of sales are credit sales. 40% of credit sales are collected in the month of sale and remaining in the next month. Accounts receivable as on 31st October will be collected in November.

• Gross profit margin is 20%.
• Desired ending inventory must be equal to 28% of next month's cost of goods sold
• Inventory is purchased on account and half of the payment is made in the month of purchase and remaining in the next month. All Accounts payable will be paid in the month of November
• Cash will be paid for purchase of equipment of Rs.150,000
• Income tax of Rs.25,000 will be paid in the month of November.
• Variable selling and administrative expenses are 20% of sales and fixed selling expenses are Rs.100,000 which include depreciation of Rs.20000
• Loan from bank and interest payable will be repaid in the month of November.
• Desired ending balance of cash is Rs.60000 Company has the option to borrow any amount of loan in increments of 1,000. No interest will be charged on this loan.

Requirements

Question 1: Prepare expected cash collection for November.

Question 2: Prepare purchase budget and cash disbursement schedule for inventory purchase.

Question 3: Prepare Cash budget for November.

Question 4: Prepare budgeted income statement for the month of November.

Question 5: Prepare budgeted balance sheet as on 30th November.