Demonstration Problem for Chapter 7
Demonstration Problem 7-1
Comprehensive Budgeting Problem
Chang Distributors, a wholesale company, is considering whether to open a new
The center would open January 1, 2006.
To make the decision,
the planning committee requires a master budget for the center’s first quarter of
operation (January, February, and March of 2006).
You are to construct the first quarter master budget based on the following
January sales are estimated to be $400,000 of which $100,000 will be cash and
$300,000 will be credit.
The company expects sales to grow 10% per month.
Prepare a sales budget.
The company expects to collect 100% of accounts receivable in the month
following the sale.
Prepare a schedule of expected cash receipts.
Use the information developed in
requirements a and b
to determine the amount