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# AC202 Week 7 Homework Answers - Problem 23-5A(130 minutes...

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Problem 23-5A (130 minutes) Part 1 NYGAARD SPORTS CO. Sales Budgets January, February, and March 2010 Budgeted Units Budgeted Unit Price Budgeted Total Dollars January 2010 ................................................. 7,500 \$53 \$ 397,500 February 2010 ............................................... 9,250 53 490,250 March 2010 .................................................... 10,750 53 569,750 Total for the first quarter .............................. 27,500 \$1,457,500 Part 2 NYGAARD SPORTS CO. Merchandise Purchases Budgets January, February, and March 2010 January February March Total Next month’s budgeted sales ............ 9,250 10,750 10,500 Ratio of inventory to future sales ...... x 20% x 20% x 20% Budgeted ending inventory ............... 1,850 2,150 2,100 Add budgeted sales ............................ 7,500 9,250 10,750 Required available merchandise ....... 9,350 11,400 12,850 Deduct beginning inventory ............... (4,750 ) (1,850 ) (2,150 ) Units to be purchased ........................ 4,600 9,550 10,700 24,850 Budgeted cost per unit ....................... \$ 30 \$ 30 \$ 30 \$ 30 Budgeted merchandise purchases .... \$138,000 \$286,500 \$321,000 \$745,500 Part 3 NYGAARD SPORTS CO. Selling Expense Budgets January, February, and March 2010 January February March Total Budgeted sales ............................. \$397,500 \$490,250 \$569,750 Sales commission percent .......... x 20% x 20% x 20% Sales commissions expense ....... 79,500 98,050 113,950 \$291,500 Sales salaries ................................ 6,000 6,000 6,000 18,000 Total selling expenses ................. \$ 85,500 \$104,050 \$119,950 \$309,500

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Problem 23-5A (Continued) Part 4 NYGAARD SPORTS CO. General and Administrative Expense Budgets January, February, and March 2010 January February March Total Salaries ............................................ \$13,000 \$13,000 \$13,000 \$39,000 Maintenance .................................... 2,100 2,100 2,100 6,300 Depreciation* ................................... 6,000 7,000 7,300 20,300 Total expenses ................................ \$21,100 \$22,100 \$22,400 \$65,600 * Depreciation expense calculations: straight-line method, 8-year useful life, no salvage; \$36,000 purchased in January, \$96,000 purchased in February, \$28,800 in March Annual Deprec. Amount January February March Total Equipment owned on 12/31/2009 ...................... \$67,500 \$5,625 \$5,625 \$5,625 \$16,875 Purchased in January .......... 4,500 375 375 375 1,125 Purchased in February ........ 12,000 1,000 1,000 2,000 Purchased in March ............. 3,600 ______ ______ 300 300 Totals ..................................... \$6,000 \$7,000 \$7,300 \$20,300 Part 5 NYGAARD SPORTS CO. Capital Expenditures Budgets January, February, and March 2010 January February March Equipment purchases ................................. \$36,000 \$96,000 \$ 28,800 Land purchase ............................................. ______ ______ 155,000 Total ............................................................. \$36,000 \$96,000 \$183,800
Problem 23-5A (Continued) Part 6 NYGAARD SPORTS CO. Cash Budgets January, February, and March 2010 January February March Beginning cash balance ............................... \$ 35,000 \$ 25,000 \$175,308 Cash receipts from customers (note A) ......... 209,500 669,310 474,244 Total cash available ...................................... 244,500 694,310 649,552 Cash disbursements Payments for merchandise (note B) ............ 70,000 302,600 167,700 Sales commissions .................................... 79,500 98,050 113,950 Sales salaries ............................................. 6,000

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