Alliance Printing of Baltimore has applied for a loan. Bank of America has requested a budgeted balance sheet at

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Preparing an operating and a financial budget [50–60 min]

Alliance Printing of Baltimore has applied for a loan. Bank of America has requested a budgeted balance sheet at April 30, 2012, and a budgeted statement of cash flows for April. The March 31, 2012, budgeted balance sheet follows:

ALLIANCE PRINTING  Budgeted Balance Sheet March 31, 2012
Assets Liabilities
Current assets:		Current liabilities:
Cash	$ 51,100	Accounts payable	$ 7,800
Accounts receivable	14,900	Total liabilities	$ 7,800
Inventory	12,100
Total current assets	$ 78,100	Stockholders’ Equity
Plant assets:		Common stock	36,000
Equipment and fixtures	80,800	Retained earnings	102,800
Less: Accumulated depreciation	12,300	Total stockholders’ equity	$138,800
Total plant assets	$ 68,500
Total assets	$146,600	Total liabilities and stockholders’ equity	$146,600

As Alliance Printing’s controller, you have assembled the following information:

a. April dividends of $8,000 were declared and paid.

b. April capital expenditures of $16,700, budgeted for cash purchase of equipment.

c. April depreciation expense, $400.

d. Cost of goods sold, 30% of sales.

e. April operating expenses, including salaries, total $35,000, 40% of which will be
paid in cash and the remainder will be paid next month.

f. Additional April operating expenses also include miscellaneous expenses of 5% of
sales, all paid in April.

g. April budgeted sales, $85,000, 60% is collected in April and 40% in May.

h. April cash payments of March 31 liabilities incurred for March purchases of
inventory, $7,800.

i. April purchases of inventory, $11,200 for cash and $37,300 on credit. Half the
credit purchases will be paid in April and half in May.

and so on ......