The Bandeiras Corporation, a merchandising firm, has budgeted its activity for December according to the following information:

a. Sales at $550,000, all for cash.
b. Merchandise inventory on November 30 was $300,000.
c. The cash balance at December 1 was $25,000.
d. Selling and administrative expenses are budgeted at $60,000 for December and are paid in cash.
e. Budgeted depreciation for December is $35,000.
f. The planned merchandise inventory on December 31 is $270,000.
g. The cost of goods sold is 75% of the sales price. All purchases are paid for in cash.
h. There is no interest expense or income tax expense.

Required:
a. What are the budgeted cash receipts for December?
b. What are the budgeted cash disbursements for December?
c. What is the budgeted net income for December?

Therefore the budgeted cash receipts for December is $550,000 since there is no other receipts which means that the Cash sales of the amount of $550,000 will represent the whole Cash receipts

b. Calculation to determine the budgeted cash disbursements for December

BUDGETED CASH DISBURSEMENTS for December

Cash purchases $412,500

($550,000*75%)

Add Selling and administrative expenses budgeted $60,000

Total Cash disbursement $472,500

Therefore the budgeted cash disbursements for December is $472,500

c. Calculation to determine the budgeted net income for December

BUDGETED NET INCOME FOR DECEMBER

Sales $550,000

Less Cost of goods sold ($442,500)

($300,000+$412,500-$270,000)

Gross margin $107,500

($550,000-$442,500)

Less: Operating Expense

Selling and administrative expense ($60,000)

Depreciation expense ($35,000)

Net income $12,500

($107,500-$60,000-$35,000)

Therefore the budgeted net income for December is $12,500