The company LNI, Inc. needs to prepare the budgets for the next four months. The current month is March 2010, andthe total of sales reported in the month was $40,000.
The policies of the company are the following:
• The sales are made 60% in cash and 40% on account.
• All credit accounts arecollected the next month of the sale.
• They sell one type of product and the price is $80.
• The cost of goods sold represents the 70% of the respective sales.
• At the end of every month,the company expects to keep an inventory of $20,000 plus the 80% of the cost of goods sold expected for the next month.
• Accounts payable to suppliers are required to be paid within 30 days.• The supplier requires the 50% of the purchase to be paid in the current month.
• Salaries to employees are divided into Fixed salaries of $2,500 per month, and commissions, which are the 15%of the sales, for all months.
Other monthly expenses:
- The administrative expenses are the 5% of the sales, and are paid in cash.
- The company pays $2,000 of rent.
- The cost ofthe insurance is $200.
- The depreciation expense (including new equipment) is $500.
-The sales in units for the next four months will be:
May 1,000June 750
- LNI will buy new equipment for the offices in April for $3,000.
- The company will require a loan in April for $14,000.
- They plan to pay the loan asfollows: In May $1,000, in June $10,000 and in July $3,000.
- The interest they will be required to pay are $10 in May, $150 in June and $60 in July.
- LNI wants to keep cash for $10,000 at the endof every month.
- Sales budget
- Collection of sales budget
- Purchases budget
- Purchases payments budget
- Salaries budget
- Salaries payments...