1、PowerPoint Authors:Susan Coomer Galbreath, Ph.D., CPACharles W. Caldwell, D.B.A., CMAJon A. Booker, Ph.D., CPA, CIACynthia J. Rooney, Ph.D., CPAMcGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.Chapter 23MASTER BUDGETS AND PLANNING23 - 2Communicatesmanagement pl

2、ansthroughout theorganization.Provides a benchmarkfor evaluatingperformance.Promotes analysisand a focus onthe future.Converts long-termstrategic plans into short-term financialplans.Motivates employees throughparticipation in the budgeting processand the establishment of attainable goals. Enhances

3、coordination so thatactivities of all units contribute tomeeting the companys overall goals.C 123 - 3Consists of managers from all departmentsof the organization.Provides central guidance to insure that individual budgets submitted from all departments are realistic and coordinated.BUDGET COMMITTEEC

4、 123 - 4Flow of budget data is a bottom-up process.SupervisorSupervisorMiddleManagementSupervisorSupervisorMiddleManagementTop ManagementBUDGET COMMITTEEC 123 - 52009201020112012Operating BudgetThe annual operating budget may be divided into quarterlyor monthly budgets.BUDGET TIMINGA continuous or r

5、olling budget is a twelve-month budget that rolls forward one month as thecurrent month is completed.C 123 - 6MASTER BUDGET COMPONENTSSalesbudgetMerchandisepurchasesPrepare financial budgets:CashIncome statementBalance sheetPreparecapitalexpenditurebudgetPrepareselling andgeneraladministrativebudget

6、sC 223 - 7SalesBudgetEstimatedUnit SalesEstimatedUnit PriceAnalysis of economic and market conditions+Forecasts of customer needs from marketing personnelSALES BUDGETP 123 - 8 In September 2011, Hockey Den sold 700 hockey sticks at $100 each. Hockey Den prepared the following sales budget for the ne

7、xt four months: SALES BUDGETP 123 - 9SALES BUDGETP 123 - 10 The quantity purchased will be affected by: Just-in-time inventory systems that enable purchases of smaller, frequently delivered quantities.Safety stock inventory systems that provide protection against lost sales caused by delays in suppl

8、ier shipments. MERCHANDISE PURCHASES BUDGETP 123 - 11 Hockey Den buys hockey sticks for $60 each and maintains an ending inventory equal to 90 percent of the next months budgeted sales. On September 30, 900 hockey sticks are on hand.Inventoryto bepurchased=Budgetedending inventory+Budgeted cost of s

9、alesfor the periodBudgetedbeginninginventoryLets prepare the purchases budget for Hockey Den.MERCHANDISE PURCHASES BUDGETP 123 - 12MERCHANDISE PURCHASES BUDGETP 123 - 13Lets prepare the selling expense budget for Hockey Den. Hockey Den pays sales commissions equal to 10 percent of total sales. Hocke

10、y Den pays a monthly salary of $2,000 to its sales manager. SELLING EXPENSE BUDGETP 123 - 14From Hockey Dens sales budgetP 1SELLING EXPENSE BUDGET23 - 15Lets prepare the general and administrativeexpense budget for Hockey Den. General and administrative salaries are $4,500 per month. Depreciation of

11、 equipment is $1,500 per month. GENERAL AND ADMINISTRATIVEEXPENSE BUDGETP 123 - 16P 1GENERAL AND ADMINISTRATIVEEXPENSE BUDGET23 - 17CAPITAL EXPENDITURES BUDGETHockey Den does not anticipate disposal of any plant assets through December 2011, but management is planning to acquire additional equipment

12、 for $25,000 cash in December 2011.Since this is the only budgeted capital expenditure for the quarter, no separate budget is shown.P 123 - 18CashBudgetExpectedReceiptsandDisbursementsBudgetedIncomeStatementBudgetedBalanceSheetFINANCIAL BUDGETSP 223 - 19 Forty percent of Hockey Dens sales are for ca

13、sh. The remaining 60 percent are credit sales that are collected in full in the month following the sale.Lets prepare the cash receipts budget for Hockey Den. BUDGETED CASH RECEIPTSP 223 - 20From Hockey Dens sales budget60 percent of September sales are collected in October40% of sales60% of salesP

14、2BUDGETED CASH RECEIPTS23 - 21 Hockey Dens purchases of merchandise are entirely on account. Full payment is made in the month following the purchase. The September 30 balance of Accounts Payable is $58,200.Lets look at cash disbursementsfor purchases for Hockey Den. P 2CASH DISBURSEMENTSFOR PURCHAS

15、ES23 - 22From merchandise purchases budgetCASH DISBURSEMENTSFOR PURCHASESP 223 - 23Hockey Den: Has a September 30 cash balance of $20,000. Will pay a cash dividend of $3,000 in November.ContinueCASH BUDGETP 2BeginningCashBalanceBudgetedCash ReceiptsBudgetedCash DisbursementsPreliminaryCashBalance+=

16、If adequate, repay loans or buy securities. If inadequate, increase short-term loans.23 - 24Hockey Den: Has an income tax liability of $20,000 from the previous quarter that will be paid in October. Will purchase $25,000 of equipment in December. Has an agreement with its bank for loans at the end o

17、f each month to enable a minimum cash balance of $20,000. Pays interest each month equal to one percent of the prior months ending loan balance. Repays loans when the ending cash balance exceeds $20,000. Owes $10,000 on this loan arrangement on September 30. Has 40 percent income tax rate. Will pay

18、taxes for current quarter next year.CASH BUDGETP 223 - 25From Cash Receipts BudgetFrom Cash Disbursementsfor PurchasesFrom Selling Expense BudgetFrom General andAdministrative Expense BudgetDepreciation is anon-cash expense.01 $10,000Because Hockey Denmaintains a minimumcash balance of $20,000,the c

19、ompany mustborrow $12,800.P 223 - 26Ending cash balance for October is the beginning November balance.CASH BUDGET CONTINUEDP 223 - 27.01 $22,800Cash balanceis sufficientto repay the$22,800 loan.P 223 - 28Ending cash balance for November is the beginning December balance.CASH BUDGET CONTINUEDP 223 -

20、29P 223 - 30CASH BUDGET CONTINUEDP 223 - 31Lets prepare the budgeted incomestatement for Hockey Den. Cash BudgetBudgetedIncomeStatementCompletedBUDGETED INCOME STATEMENTP 223 - 32From the Sales BudgetP 2From the Merchandise Purchases BudgetFrom the SellingExpense Budget From the General and Administ

21、rative Expense BudgetDepreciation is a non-cash expense. $71,672 .4023 - 33Lets prepare the budgeted balancesheet for Hockey Den. BudgetedBalanceSheetCompletedBudgetedIncomeStatementBUDGETED BALANCE SHEETP 223 - 34 Hockey Den reports the following accountbalances on September 30 prior to preparingit

22、s budgeted financial statements: Equipment $200,000 Accumulated depreciation $ 36,000 Common stock $150,000 Retained earnings $ 41,800Lets prepare the budgeted balancesheet for Hockey Den. PREPARING A BUDGETEDBALANCE SHEETP 223 - 35From the Cash BudgetP 2From the Cash Receipts Budget$36,000 September 30 balance plusthe $4,500 from the General andAdministrative Expense Budget$200,000 September