1 1 Part 1 of 2 Required information Problem 7-23A (Algo) Preparing a master budget for retail company with no beginning account balances LO 7-2,7-3, 7-4, 7-5, 7-6 The following information applies to the questions displayed below) Wolton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1 year 1. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks 50 Problem 7-23A (Algo) Part 1 Required a. October sales are estimated to be $390,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale Prepare a schedule of cash receipts. c. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending Inventory equal to 20 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $13,700. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases e. Budgeted selling and administrative expenses per month follow Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed). Rent (fixed) Miscellanen find $19,700 45 of Sales 2 of Sales $ 3,100 $ 5,700 $ 6,500 2.900 Required information a. October sales are estimated to be $390,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget. b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. c. The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $13,700. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow, 2 of Sales Salary expense (fixed) $19,700 Sales commissions 45 of Sales Supplies expense Utilities (fixed) $ 3,100 Depreciation on store fixtures (fixed) $ 5,700 Rent (fixed) $ 6,500 Miscellaneous (fixed) $ 2,900 "The capital expenditures budget indicates that Walton will spend $173,800 on October 1 for store fixtures, which are expected to have a $37.000 salvage value and a two-year (24-month) useful life. Use this information to prepare a selling and administrative expenses budget. 1. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. 9. Walton borrows funds, in increments of $1,000, and repays them on the last day of the month, Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash budget Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. g. Walton borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays Interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion, Prepare a cash budget Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G October sales are estimated to be $390,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget. October November December Sales Budget Cash sales Sales on account Total budgeted sales $ 0 $ 0 $ Required B > Complete this question by entering your answers in the tabs below. Required A Required B Required cRequired D Required E Required F Required G The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. October November December Schedule of Cash Receipts Current cash sales Plus collections from AR Total collections $ $ 0 $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $13,700. Assume that all purchases are made on account. Prepare an inventory purchases budget. October November December Inventory Purchases Budget 0 0 0 Inventory needed $ 0 $ 0 $ 0 Required purchases (on account) Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.) October November December Schedule of Cash Payments Budget for Inventory Purchases Payment of current month's accounts payable Payment for prior month's accounts payable Total budgeted payment for inventory $ 0 $ 0 $ 0 Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G Prepare a selling and administrative expenses budget. November December October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses $ 0 $ 0 $ Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses October November December Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utilities Depreciation on store foxtures Rent Miscellaneous Total payments for S&A expenses $ 0 $ 0 $ 0 Required A Required B Required C Required D Required E Required F Required G Walton borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays Interest of 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December Section 1: Cash Receipts 0 0 Total Cash available Section 2: Cash Payments 0 0 0 Total budgeted disbursements Section 3: Financing Activities 0 0 0 $ 0 $ 0 $ 0 Required H Required 1 Required) Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) WALTON COMPANY Pro Forma Balance Sheet December 31. year 1 Assets Total assets Liabilities Equity Total liabilities and equity Required H Required 1 Required) Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.) WALTON COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, year 1 Cash flows from operating activities Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities