Master Budget – Saskatoon Kite

Company

Saskatoon Kite Company, a small merchandising firm that sells kites wants a
master budget for the next three months, beginning January 1, 20XX.

It desires an ending minimum cash balance of $5,000 each month. Sales

are forecasted to be 7,750 units in January, 9,375 units in February, and
4,750 units in March at an average wholesale selling price of $8 per kite

Ending inventory is 12% of the following month’s expected sales.

Merchandise costs an average of $4 per kite.

Purchases during any given month are paid in full during the following
month.

All sales are on credit, payable within 30 days, but experience has shown
that 60% of current sales are collected in the current month, 30% in the
next month, and 10% in the month thereafter. Bad debts are negligible.

Monthly operating expenses are as follows:

Wages and salaries $12,000
Depreciation $250
Miscellaneous $2,500
Rent $2,000

Cash dividends of $1,500 are to be paid in January. The company plans to

buy some new fixtures for $3,000 cash in March

Cash Balance as of December 31, 20X5 is $5,000

From the beginning Balance Sheet:

Retained Earnings $61,215
Capital Stock $9,000

Prepare a master budget including a Sales Budget, Purchases Budget,

Expense Budget , Budgeted Income Statement, Cash Receipts and Payments
Budgets, Cash Budget and Budgeted Balance Sheet for the months January
through March 20XX.