Can y ou help me solve this?
Question:
Claudio Suarez Company is a wholesale distributor of premium Mexican wines. The company’s balance sheet as of October 31, 2006 is expected to be as given below:
Claudio Suarez Company
Balance Sheet
October 31, 2006
Assets
Cash $100,000
Accounts receivable 300,000
Inventory 50,000
Fixed assets 400,000
Total assets$850,000
Liabilities and Stockholders’ Equity
`
Accounts payable$227,500
Notes payable 250,000
Common stock 322,000
Retained earnings 50,500
Total liabilities & stockholders’ equity $850,000
The company is in the process of preparing budget data for November. A number of budget items have already been determined as stated below:
A.All sales are on credit. Sales for November are budgeted at $700,000. One-half of credit sales are collected in the month of sales, 25% in the month following the sale and the remaining 25% in the second month after the sale. Actual sales for September and October were $200,000 and $500,000, respectively.
B.Cost of goods sold is 65% of sales. Claudio Suarez’s desired inventory at November 30 is $40,000.
C.Thirty percent of all purchases are paid for in the month of purchase; the remaining 70% are paid in the following month. (You must compute the amount of budgeted purchase for November.)
D.Cash operating expenses are based on the following formula: $60,000 + 20% of sale dollars.
E.Depreciation for November is budgeted at $25,000.
F.Annual interest on the notes is 6%, payable on the last day of each month. (You must determine the amount of interest to be paid.)
G.New equipment costing $70,000 will be acquired on November 30.
H.The company plans to issue new common stock with anticipated total cash proceeds of $150,000.
I.On November 15, the company plans to pay cash dividends total $20,000.
Required:
(1)Prepare a cash budget for November.
(2)Prepare an income statement for November.
(3)Prepare a balance sheet as of November 30, 2006.
Answer:
This accounting problem is way easy to solve. I believe that the size of the problem is over whelming you.
Just start out by drawing out your t-accounts and then journalize each entry and the information needed to prepare your financials will be right in front of you.
What are you specifically stuck on?
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