-
+1 - 312-224-1615
Get in touch with us
-
support@helpwithassignment.com
Send us an e-mail
Solution Library
Preparation of Financial Statements for Al suleman Electronics Store
Question
You are the new manager of the Al suleman Electronics store in the Mall of UAE. Top management of the Electronics is convinced that management training should include the active participation of store managers in the budgeting process. You have been asked to prepare a complete master budget for your store for June, July and August. All accounting is done centrally so you have no expert help on the premises. In addition, tomorrow the branch manager and the assistant controller will be here to examine your work; at that time, they will assist you in formulating the final budget document. The idea is to have you prepare the initial budget on your own so that you gain mor e confidence about accounting matters. You want to make a favorable impressions on your superiors, so you gather the following data as of May 31, 2013.
|
Cash |
AED29,000 |
Recent and Projected Sales |
||
|
Inventory |
AED434,000 |
April |
AED300,000 |
|
|
Accounts receivable |
AED369,000 |
May |
350,000 |
|
|
Net Furniture and fixtures |
AED168,000 |
June |
700,000 |
|
|
Total Assets |
AED1,000,000 |
July |
400,000 |
|
|
Accounts payable |
AED489,000 |
August |
400,000 |
|
|
Owners' Equity |
511,000 |
September |
300,000 |
|
|
Total liabilities and owners' equities |
AED1,000,000 |
|||
Credit sales are 90% of total sales. Credit accounts are collected 80% in the month following the sale and 20% in the subsequent month. Assume that bad debts are negligible and can be ignored. The accounts receivable on May 31 are the result of the credit sales for April and May.
(.20 x .90 x AED300,000) + (1.0 x .90 x AED350,000) = AED369,000.
The average gross profit on sales 38%.
The policy is to acquire enough inventory each month to equal the following month’s projected cost of goods sold. All purchases are paid for in the month following purchase.
Salaries, wages and commissions average 20% of sales; all other variable expenses are 4% of sales. Fixed expenses for rent, property taxes, and miscellaneous payroll and other items are AED55,000 monthly. Assume that these variable and fixed expenses require cash disbursement each month Depreciation is AED2, 500 monthly.
In June, AED55,000 is going to be disbursed for fixtures acquired and recorded in furniture and fixtures in May. The May 31 balance of accounts payable includes this amount.
Assume that a minimum cash balance of AED25,000 is to be maintained. Also assume that all borrowings are effective at the beginning of the month and all repayments are made at the end of the month of repayment. Interest is compounded and added to the outstanding balance each month, but Interest is paid only at the ends of months when principal is repaid. The interest rate is 10% per annum; round interest interest computations and interest payments to the nearest dollar. Interest payment may be any dollar amount, but all borrowing and repayments of principal are made in multiples of AED1,000.
- Prepare a budgeted income statement for the coming June through August quarter, a cash budget (for each of the next three months), and a budgeted balance sheet for August 31, 20X8. All operations are evaluated on a before-income tax basis, so income taxes may be ignored here.
- Explain why there is a need for a bank loan and what operating sources supply cash for repaying the bank loan.
Summary
This question belongs to accounting and discusses about budgeted income statement operating sources supply cash for a company as given in the case study.
Total word count: Excel
Download Full Solution
WHAT OUR STUDENTS SAY
Designing a motivational strategy as a part of the employee development plan was a tough ask for me as I missed few classes last semester. However, the help I got from HwA was remarkable and they not only offered me the assignment solution but also at the same time helped me to understand the concepts.
Steve Wilson Student
The best part about the assignments is the quality of writing that I have received every time. The “real world†examples suggested by the online Variance analysis assignment experts with requisite numbers to back up the examples help take my variance analysis – performance metrics assignment stand apart from the others in my class and have helped improve my over all grade point average.
Alexandria Ray Student
Happy with the final product and the answers were coherent and well-organized. Thanks for embedding each and every detail. It’s definitely worth the money and important thing to mention is that the solutions are 100% plagiarism-free.
Tyler Student
I needed urgent help with my Labor Economics Assignment essay. The other online help service that I was using had produced an extremely unsatisfactory essay and I was in desperate need to make it right. I did not even have more than a day to fix it. But when I approached HwA they were up for the challenge and boy did they deliver! I passed in my assignment and even managed to be in the top ten of the class.
Amy Alexander Student
My wee practical knowledge was really an obstacle to my assessment in cardiovascular collapse assignment. Then I came across HwA’s cardiovascular system assignment help. The experts here are just marvellous and they have first-hand experience in dealing with patients. That helped a lot, indeed.!
Rachel McCann Student
Comments
this is a very good website
I have 50 questions for the same test your page is showing only 28
hi can you please help or guide me to answer my assignments. thanks
hi can anyone help or guide me to my assignments. thanks
This solution is perfect ...thanks
Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes
Perfect bank of solution.
great !
thanks for the quick response. the solution looks good. :)
thnx for the answer. it was perfect. just the way i wanted it.
works fine.