Reference no: EM131267977
The Earth Springs Corporation buys water reclamation and filtration systems then resells them for $1,000 per unit andplans to raise that price by $100 in May. The company had the following sales data available in units: February 1,100(actual), March 1,000 (budget), April 1,300 (budget), May 1,400 (budget) and June 1,600 (budget). All sales aremade on account and recent experience shows that 20% of sales are collected in the month of the sale and 80% inthe month after the sale.
The company purchases its product for $800 per unit and all purchases are paid in full in the month the purchase ismade. The company maintains ending inventory equal to 25% of the next month’s unit sales and had 260 units ininventory on March 1st.
The company’s advertising is fixed at $3,500 per month, has other administrative costs of $33,000 per month andsalaries of $40,000 per month; all selling and administrative expenses are paid in full each month. The companyplans to give its salaried employees a one-time bonus of $4,000 in April.
The company plans to purchase $150,000 of equipment in May and plans to take out a $100,000 loan in April to helpfund the purchase.
The company’s cash balance on February 28th is $35,000.
Required:
Given the information above, prepare a sales budget, purchases budget, cash budget, budgeted income statement,cash budget and a budgeted balance sheet (for cash, accounts receivable, inventory and liabilities) for March, Apriland May.
Questions:
1. what is the company's total dollar amount for budgeted sales for May?
2. what is the company's total dollar amount for budgeted purchases for April?
3. what is the company's budgeted ending cash for May?
4. what is the company's budgeted net income for April?
5. what is the company's amount for budgeted accounts receivable for May?
6. what is the company's amount for budgeted liabilities for May?
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: The Earth Springs Corporation buys water reclamation and filtration systems then resells them for $1,000 per unit andplans to raise that price by $100 in May. what is the company's total dollar amount for budgeted sales for May? what is the company's..
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