Budget Schedules and Changes. Gardner Hardware provided these budget data:

Other data are as follows:

(a) Sales are on credit, with 60 percent of sales collected in the month after sale and 40 percent in the second month after sale.

(b) Cost of sales is 60 percent of sales.

(c) Other variable costs are 10 percent of sales, paid in the month incurred.

(d) Inventories are to be 150 percent of next month’s sales forecast.

(e) Purchases are paid in the month after purchase.

(f) Fixed expenses of $3,000 are paid each month.
Required:
1. Create the budget schedules needed to support a cash-flow forecast for the first three months of 1998.
2. Prepare a budgeted income statement for the first quarter of 1998.

Transcribed Image Text:

Forecast Sales for 1998 January... February March.... April Balance Sheet Data, December 31, 1997 $60,000 Cash.... $ 8,000 50,000 Accounts receivable: 80,000 From November sales. 16,000 90,000 From December sales 50,000 Inventory .... 54,000 Accounts payable. 37,000