1. What is the budgeted cash collections for the month of October?
2. What is the budgeted purchases during October?
3. What is the budgeted gross profit for the month of October?
DANK, INC.
Balance Sheet
September 30, 2015
Assets
Cash P 416,000
Accounts receivable, net 1,200,000
Merchandise inventory 2,520,000
Non-current assets 8,000,000
Total assets P 12,136,000
Liabilities and Equity
Accounts payable P 1,400,000
Capital stock 7,200,000
Retained earnings 3,536,000
Total liabilities and Stockholders’ equity P 12,136,000
Additional information:
• Budgeted sales for October is P 4,160,000; for November, P 4,000,000
• Gross profit rate is 20%
• Of the total sales, 40% is on credit which the company collects in the month following the month
of sale.
• Purchases in each month are composed of:
80% of the coming month’s requirement
20% of the current month’s requirement
• Purchases are paid for in the month following the month of purchase