chapter 15 - bu. controllin
TRANSCRIPT
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Budgeting as aTool for Planningand Controlling
Chapter
15100 Shares
$1 par value
Budget????
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Learning Objectives
Describe the importanceand benefits ofbudgeting.
Explain the process ofbudget administration.
Describe a masterbudget and the process
of preparing it.
Prepare eachcomponent of a masterbudget and link each to
the budgeting process. Link both operating and
capital expendituresbudgets to budgeted
financial statements.
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Budget Goals: Avoid
Setting budget goalstoo tightly.
Setting budget goals
too loosely. Setting conflicting
budget goals.
Purposes and Goals of Budgeting
Purposes of Budgeting
Establishing specificfuture goals.
Executing plans to
achieve the goals.Comparing actualresults to the goals.
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Budgeting is the process of planning futurebusiness actions and expressing them asformal plans.
Budget is a formal statement of a companysfuture plans.
The role of accounting during the budgetingprocess is to:(a) provide historical data on revenues, costs,
and expenses,(b) express managements plans in financial terms
and(c) prepare periodic budget reports.
Nature of Budgeting
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Nature of Budgeting
Requires all management plan ahead. Provides definite objectives for evaluating
performance.
Creates an early warning system for potentialproblems. Facilitates the coordination of activities within
the business. Results in greater management awareness
of the entitys overall operations. Motivates personnel throughout the
organization to meet planned objectives
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Advantages
Communicates plans
and instructions
Promotes analysis and
a focus on the future
Motivates employees
Provides a basis forevaluating performance against
past or expected results
Coordinatesbusiness activities
Defines goalsand objectives
Budget Process
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Budgeting is a detailed activity that requiresadministration.
3 aspects that are important:1. Budget Committee
2. Budget Reporting
3. Budget Period
Budget Adminstration
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Provides central guidance toensure that individual
budgets submitted from alldepartments are realistic andcoordinated.
Budget Committee
Consists of managers from all departmentsof the organization.
Oversees the budget preparation.
Communication between originatingdepartment and budget committee.
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Flow of Budget Data is abottom-upprocess.
Supervisor Supervisor
MiddleManagement
Supervisor Supervisor
MiddleManagement
Top Management
Budget Committee
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Budget Reporting
Budget period coincides with the accountingperiod.
Budget period pertains to the time period for
which the budget is prepared such as a year ormonth.
Annual budget usually separated into quarterlyor monthly to allow management evaluate
performance and take action. Managers compare actual results with
budgeted to identify variance.
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2005 2006 2007 2008
Operating Budget
The annual operating budgetmay be divided into quarterlyor monthly budgets.
Budget Timing
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Continuous orRolling Budget
The budget may be a twelve-month
budget that rolls forward one monthas the current month is completed.
2005 2006 2007 2008
Budget Timing
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Master Budget
A master budget is a formal overall plan for acompany consist of plans for businessoperations, capital expenditure and financialresults.
Several individual budgets are linked with eachother and consists of 3 types budgeting:
Operating budgets show the individualbudgets that result in the preparation of the
budgeted income statement. Capital expenditure budgetis a plannedcapital expenditure for fixed assets.
Financial Budgetfocus primarily on the cash
resources needed to fund expected operations
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Financial Budgets
Cash Budget Budgeted Income Statement Budgeted Balance Sheet
Master Budget Components
Operating Budgets
Sales Budget Merchandise Purchase
Budget (for Merchandiser) Production Budget &
Manufacturing Budget (for
Manufacturer) Selling Expense Budget General and Administrative
Budget
Capital ExpendituresBudget
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Master Budget Sequence
PrepareSales
budget
PrepareMerchandise
Purchases and/orProduction and
ManufacturingBudget.
Prepare financialbudgets:cash
incomestatement
balance sheet
Preparecapital
expenditurebudget
Prepareselling,
general andadministrative
budgets
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SalesBudget
EstimatedUnit Sales
EstimatedUnit Price
Analysis of economic and market conditions+
Forecasts of customer needs from marketing personnel
Sales Budget
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Sales Budget
The sales budget is the first budget prepared.
Each of the other budgets depends on the sales
budget. It is derived from the sales forecast. It represents managements bestestimateof sales
revenue for the budget period.
Sales = Budgeted x Unit
Budget Unit Sales Price
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Sales Budget
Sales budget alwaysfollowed by BudgetedCash Receiptsor Cash
Receipts Schedule.
Preparing a CashReceipts Schedule from
customers is useful inpreparing a cash budget.
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In September 2006, Hockey Den sold 700hockey sticks at $100 each. Hockey Denprepared the following sales budget for the next
four months:
Sales Budget - Illustration
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Sales Budget
HOCKEY DEN
MONTHLY SALES BUDGET
OCTOBER 2006 JANUARY 2007
Budgeted Budgeted BudgetedUnit Sales Unit Price Total Sales
September 2006 (actual) 700 100$ 70,000$
October 2006 1,000 100$ 100,000$
November 2006 800 100 80,000December 2006 1,400 100 140,000
Total 3,200 100$ 320,000$
January 2007 900 100$ 90,000$
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Merchandise Purchases Budget
It is prepared based on sales budget. It estimates the quantity of merchandises
needed in order to fulfill the estimated sales.
It also depends on the estimated beginninginventory and the desired ending inventory asa preparation for the following sales.
Inventoryto be
purchased
=Budgetedending
inventory
+Budgeted
cost of salesfor the period
Budgetedbeginninginventory
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Merchandise Purchases Budget
Purchase budget alwaysfollowed by BudgetedCash Disbursementsfor
Purchases or CashDisbursement Schedule.
Preparing a CashDisbursements Scheduleto suppliers is useful inpreparing a cash budget.
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The quantity purchased is affected by:
Just-in-time inventory systemsthat enablepurchases of smaller, frequently delivered
quantities.
Safety stock inventory systemsthat provideprotection against lost sales caused by
delays in supplier shipments.
Merchandise Purchases Budget
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Merchandise Purchases Budget -Illustration
Hockey Den buys hockey sticks for $60.00 eachand maintains an ending inventory equal to 90percent of the next months budgeted sales. 900hockey sticks are on hand on September 30.
Lets prepare the purchases budget for Hockey Den.
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Merchandise Purchases Budget
HOCKEY DEN
MERCHANDISE PURCHASE BUDGET
OCTOBER 2006 DECEMBER 2006
October November December
Nextmonth's unit sales 800 1,400 900Ending inventory percentage 90% 90% 90%
Budgeted ending inventory units 720 1,260 810
Add:current month's unit sales
Total units needed
Less: beginning inventory units
Number of units to be purchased
Budgeted cost per unitBudgeted cost of purchases
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Merchandise Purchases Budget
HOCKEY DEN
MERCHANDISE PURCHASES BUDGET
OCTOBER 2006 DECEMBER 2006
October November December
Nextmonth's unit sales 800 1,400 900Ending inventory percentage 90% 90% 90%
Budgeted ending inventory units 720 1,260 810
Add current month's unit sales 1,000 800 1,400
Total units needed 1,720 2,060 2,210
Less: beginning inventory units
Number of units to be purchased
Budgeted cost per unitBudgeted cost of purchases
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Merchandise Purchases Budget
HOCKEY DEN
MERCHANDISE PURCHASES BUDGET
OCTOBER 2006 DECEMBER 2006
October November December
Nextmonth's unit sales 800 1,400 900Ending inventory percentage 90% 90% 90%
Budgeted ending inventory units 720 1,260 810
Add current month's unit sales 1,000 800 1,400
Total units needed 1,720 2,060 2,210
Less: beginning inventory units (900)
Number of units to be purchased 820
Budgeted cost per unit $ 60Budgeted cost of purchases 49,200$
Beginning inventory is last month's ending inventory.
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Merchandise Purchases Budget
HOCKEY DEN
MERCHANDISE PURCHASES BUDGET
OCTOBER 2006 DECEMBER 2006
October November December
Nextmonth's unit sales 800 1,400 900Ending inventory percentage 90% 90% 90%
Budgeted ending inventory units 720 1,260 810
Add current month's unit sales 1,000 800 1,400
Total units needed 1,720 2,060 2,210
Less: beginning inventory units (900) (720) (1,260)
Number of units to be purchased 820 1,340 950
Budgeted cost per unit $ 60 $ 60 $ 60Budgeted cost of purchases 49,200$ 80,400$ 57,000$
Beginning inventory is last month's ending inventory.
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Lets prepare the selling expense budget for Hockey Den.
Hockey Den pays salescommissions equal to 10percent of total sales.
Hockey Den pays amonthly salary of $2,000to its sales manager.
Selling Expense Budget - Illustration
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From Hockey Dens sales budget
Selling Expense Budget
HOCKEY DEN
SELLING EXPENSE BUDGET
OCTOBER 2006
DECEMBER 2006
October November December Total
Budgeted sales 100,000$ 80,000$ 140,000$ 320,000$
Sales commission % 10% 10% 10% 10%
Sales commission 10,000$ 8,000$ 14,000$ 32,000$
Sales manager salary 2,000 2,000 2,000 6,000Total selling expenses 12,000$ 10,000$ 16,000$ 38,000$
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Lets prepare the general and administrative
expense budget for Hockey Den.
General andadministrative salaries are$4,500 per month.
Depreciation of equipmentis $1,500 per month.
General and Administrative ExpenseBudget - Illustration
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General and Administrative ExpenseBudget
HOCKEY DEN
GENERAL AND ADMINISTRATIVE EXPENSE BUDGET
OCTOBER 2006
DECEMBER 2006
October November December Total
Administrative salaries 4,500$ 4,500$ 4,500$ 13,500$
Equipment depreciation 1,500 1,500 1,500 4,500
Total 6,000$ 6,000$ 6,000$ 18,000$
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Operating Budgets : Merchandiser
SalesBudget
Schedule
Cash DisbursementsSchedule
Cash Receipts Schedule
Merchandise PurchaseBudget
Selling, General andAdministrative
Expenses Budget
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Operating Budgets : Manufacturer
SalesBudget
Schedule
Cash DisbursementsSchedule
Cash Receipts Schedule
ProductionBudget
Manufacturing Budget :Direct Materials, Direct labor,
Factory Overhead
Selling, General andAdministrative
Expenses Budget
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CashBudget
ExpectedReceipts
andDisbursements
BudgetedIncome
Statement
BudgetedBalanceSheet
Financial Budgets
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Cash Receipts Schedule - Illustration
Forty percent of HockeyDens sales are for cash.
The remaining sixty percentare credit sales that arecollected in full in the monthfollowing sale.
Lets prepare the cash receipts budget for Hockey Den.
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HOCKEY DEN
CASH RECEIPTS SCHEDULE
OCTOBER 2006 DECEMBER 2006
September October November DecemberBudgeted sales 70,000$ 100,000$ 80,000$ 140,000$
Accounts receivable
Cash receipts from:
Cash sales
Collection of receivables
Total cash receipts
60 percent of September sales are collected in October
From Hockey Dens sales budget
Cash Receipts Schedule
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HOCKEY DEN
CASH RECEIPTS SCHEDULE
OCTOBER 2006 DECEMBER 2006
September October November DecemberBudgeted sales 70,000$ 100,000$ 80,000$ 140,000$
Accounts receivable 42,000$ 60,000$ 48,000$ 84,000$
Cash receipts from:
Cash sales 40,000$ 32,000$ 56,000$
Collection of receivables
Total cash receipts
40% of sales
60% of sales
Cash Receipts Schedule
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HOCKEY DEN
CASH RECEIPTS SCHEDULE
OCTOBER 2006 DECEMBER 2006
September October November DecemberBudgeted sales 70,000$ 100,000$ 80,000$ 140,000$
Accounts receivable 42,000$ 60,000$ 48,000$ 84,000$
Cash receipts from:
Cash sales 40,000$ 32,000$ 56,000$
Collection of receivables 42,000 60,000 48,000
Total cash receipts 82,000$ 92,000$ 104,000$
Cash Receipts Schedule
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Hockey Dens purchases ofmerchandise are entirely onaccount.
Full payment is made in themonth following purchase.
The 30 September balance
of Accounts Payable is$58,200.
Lets look at cash disbursementsfor purchases for Hockey Den.
Cash Disbursements Schedule -Illustration
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HOCKEY DEN
CASH DISBURSEMENTS SCHEDULE
OCTOBER 2006 - DECEMBER 2006
October payments (30 September balance) 58,200$
November payments (October purchases) 49,200
December payments (November purchases) 80,400
From merchandise purchases budget
Cash Disbursements Schedule
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Hockey Den:will pay a cash dividend of $3,000 in November.
will purchase $25,000 of equipment in
December.has an income tax liability of $20,000 from the
previous quarter that will be paid in October.
has a 30 September cash balance of $20,000.
has an agreement with its bank for loans at the
end of each month to enable a minimum cash
balance of $20,000.
Cash Budget - Illustration
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Hockey Den:pays interest equal to one percent of the prior
months ending loan balance.
repays loans when the ending cash balanceexceeds $20,000.
owes $10,000 on this loan arrangement on
September 30.has 40 percent income tax rate.
will pay taxes for current quarter next year.
Lets prepare the cash budget for Hockey Den.
Cash Budget
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$
Disbursements
Payments for merchandise
Sales commissions
Sales salaries
Administrative salaries
Income taxes
DividendsInterest
Equipment purchase
Total disbursements
Preliminary balance
From Cash Receipts Schedule
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions
Sales salaries
Administrative salaries
Income taxes
DividendsInterest
Equipment purchase
Total disbursements
Preliminary balance
From Cash DisbursementsSchedule
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions 10,000 8,000 14,000
Sales salaries 2,000 2,000 2,000
Administrative salaries
Income taxes
DividendsInterest
Equipment purchase
Total disbursements
Preliminary balance
From Selling Expense Budget
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions 10,000 8,000 14,000
Sales salaries 2,000 2,000 2,000
Administrative salaries 4,500 4,500 4,500
Income taxes
DividendsInterest
Equipment purchase
Total disbursements
Preliminary balance
From General andAdministrative Expense Budget
Depreciation is anon-cash expense.
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions 10,000 8,000 14,000
Sales salaries 2,000 2,000 2,000
Administrative salaries 4,500 4,500 4,500
Income taxes 20,000
DividendsInterest 100
Equipment purchase
Total disbursements 94,800$
Preliminary balance 7,200$
0.01 $10,000
Because Hockey Denmaintains a minimum
cash balance of $20,000,the company mustborrow $12,800.
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Preliminary balance 7,200$
Additional borrowing 12,800
Loan repayment
Ending cash balance 20,000$
Ending loan balance 22,800$
Ending cash balance for Octoberis the beginning November balance.
Cash Budget Continued
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$ 20,000$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$ 112,000$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions 10,000 8,000 14,000
Sales salaries 2,000 2,000 2,000
Administrative salaries 4,500 4,500 4,500
Income taxes 20,000
Dividends 3,000Interest 100 228
Equipment purchase
Total disbursements 94,800$ 66,928$
Preliminary balance 7,200$ 45,072$
0.01 $22,800
Cash balanceis sufficientto repay the
$22,800 loan.
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Preliminary balance 7,200$ 45,072$
Additional borrowing 12,800
Loan repayment (22,800)
Ending cash balance 20,000$ 22,272$
Ending loan balance 22,800$ $ 0
Ending cash balance for Novemberis the beginning December balance.
Cash Budget Continued
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Beginning cash balance 20,000$ 20,000$ 22,272$
Receipts from customers 82,000 92,000 104,000
Total cash available 102,000$ 112,000$ 126,272$
Disbursements
Payments for merchandise 58,200$ 49,200$ 80,400$
Sales commissions 10,000 8,000 14,000
Sales salaries 2,000 2,000 2,000
Administrative salaries 4,500 4,500 4,500
Income taxes 20,000
Dividends 3,000Interest 100 228
Equipment purchase 25,000
Total disbursements 94,800$ 66,928$ 125,900$
Preliminary balance 7,200$ 45,072$ 372$
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HOCKEY DEN
CASH BUDGET
OCTOBER 2006 - DECEMBER 2006
October November December
Preliminary balance 7,200$ 45,072$ 372$
Additional borrowing 12,800 19,628
Loan repayment (22,800)
Ending cash balance 20,000$ 22,272$ 20,000$Ending loan balance 22,800$ $ 0 19,628$
Cash Budget Continued
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Lets prepare the budgeted incomestatement for Hockey Den.
CashBudget
BudgetedIncome
Statement
Budgeted Income Statement
From the Sales Budget
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HOCKEY DEN
BUDGETED INCOME STATEMENT
FOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expensesSales commissions (32,000)$
Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)
Interest expense (328)
Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$
g
From the Merchandise
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HOCKEY DEN
BUDGETED INCOME STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost of sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expenses
Sales commissions (32,000)$
Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)Interest expense (328)
Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$
Purchases Budget
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HOCKEY DEN
BUDGETED INCOME STATEMENT
FOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost of sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expenses
Sales commissions (32,000)$Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)
Interest expense (328)Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$From the SellingExpense Budget
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HOCKEY DEN
BUDGETED INCOME STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost of sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expenses
Sales commissions (32,000)$
Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)Interest expense 328
Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$
From the General and AdministrativeExpense Budget
Depreciation is a non-cash expense.
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HOCKEY DEN
BUDGETED INCOME STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost of sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expenses
Sales commissions (32,000)$
Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)Interest expense 328
Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$From the Cash Budget
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HOCKEY DEN
BUDGETED INCOME STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2006
Sales (3,200 units @ $100) 320,000$
Cost of sales (3,200 units @ $60) 192,000
Gross profit 128,000$
Operating expenses
Sales commissions (32,000)$
Sales salaries (6,000)
Administrative salaries (13,500)
Equipment depreciation (4,500)Interest expense (328) 56,328
Profit before taxes 71,672$
Income tax expense (28,669)
Profit for the period 43,003$$71,672 0.40
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Lets prepare the budgeted balancesheet for Hockey Den.
BudgetedBalance
Sheet
BudgetedIncome
Statement
Budgeted Balance Sheet
P i B d t d
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Hockey Den reports the following accountbalances on 30 September prior topreparing its budgeted financial statements:
Equipment $200,000
Accumulated depreciation $ 36,000
Common stock $150,000
Retained earnings $ 41,800
Lets prepare the budgeted balancesheet for Hockey Den.
Preparing a BudgetedBalance Sheet
HOCKEY DENBUDGETED BALANCE SHEET
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
HOCKEY DENBUDGETED BALANCE SHEET
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
From the Cash Budget
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
From the Cash ReceiptsSchedule
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
From the Merchandise Purchases Budget8,100 units @ $6
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
$200,000 30 September balance plus the$25,000 December acquisition
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
$36,000 30 September balance plus the $4,500from the General and
Administrative Expense Budget
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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$105,297Total Liabilities
$85,669Total current liabilities
$19,628$19,628Bank loan payable
$19,628Total non current liabilities
Current Liabilities
$57,000Accounts payable
$337,100Total Equity and Liabilities
28,669Income taxes payable
Non Current Liabilities
$231,803Total Equity
$231,80381,803Retained earnings
$150,000Common shares
Equity
EQUITY AND LIABILITIES
$337,100Total Assets
$152,600Total current assets
48,600Inventory
84,000Accounts receivable
$20,000Cash
Current Assets
$184,500Total non current assets
$184,500(40,500)Accumulated depreciation - Equipment
$225,000Equipment
Non Current Assets
ASSETS
AS AT 31 DECEMBER 2006
From the MerchandisePurchases Budget
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
From the BudgetedIncome Statement
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
From the Cash Budget
HOCKEY DENBUDGETED BALANCE SHEET
AS AT 31 DECEMBER 2006
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AS AT 31 DECEMBER 2006
ASSETS
Non Current Assets
Equipment $225,000
Accumulated depreciation - Equipment (40,500) $184,500
Total non current assets $184,500
Current Assets
Cash $20,000
Accounts receivable 84,000
Inventory 48,600
Total current assets $152,600
Total Assets $337,100
EQUITY AND LIABILITIES
Equity
Common shares $150,000
Retained earnings 81,803 $231,803
Total Equity $231,803
Non Current Liabilities
Bank loan payable $19,628 $19,628
Total non current liabilities $19,628
Current Liabilities
Accounts payable $57,000
Income taxes payable 28,669
Total current liabilities $85,669
Total Liabilities $105,297
Total Equity and Liabilities $337,100
Beginning retained earnings 41,800$
Add net income 43,003
Deduct dividends (3,000)
Ending retained earnings 81,803$
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End of Chapter 15