9-12
Exercise 4) Carly's Critters Company operates a gift shop at the local zoo. The results of for the first quarter of 2018 are as follows: Sales Cost of Goods Sold Gross Margin Selling & Administrative Expenses (S12.750 Operating Income Income Taxes Net Income $125,000 $56,250 $43,500 Additional Information: 1. Asset accounts are cash, accounts receivable, inventory, and equipment (net). Accounts payable is the only liability account. Owner's equity accounts are common stock and retained earnings. 2. Fifty-five percent of inventory purchases are paid in the quarter of purchase and 45 percent are paid in the following quarter. All other expenses, including taxes, are paid in the quarter incurred 3 The cash balance at the end of quarter one is $8.888. 4. Sales and cost of goods sold are expected to decrease by 12 percent in each of the next three quarters of the year 5. Selling & Administrative expenses are expected to increase by $4,675 due to increases in advertising and salaries. All other expenses in this category are expected to remain constant. in accounts receivable at the end of quarter one relates to sales made during the 6. The balance first quarter of 2018. 7. Dividends of $905 are paid out during each quarter. 8. Inventory purchases in the first quarter of 2018 are $44,440. 9 The balance in accounts payable at the end of quarter one relates to purchases made during the first quarter of 2018. 10. Selling & Administrative expense includes $985 of quarterly depreciation related to equipment. The equipment had a book value of $17,825 at the end of quarter one. 11. Inventory at the end of the first quarter is $64,670. The company plans on holding ending inventory equal to 75 percent of subsequent quarter cost of goods 12. Sixty-five percent of sales are collected in the quarter of sale and 35 percent are collected in the quarter following the sale 13. Common stock at the end of quarter one is $80,568 and retained earnings is $34,567 14. The tax rate is expected to remain at 32 percent. Required A. Prepare a budgeted income statement for the second quarter of 2018 B. Prepare a cash receipts& disbursements budget for the second quarter of 2018. C. Prepare a budgeted balance sheet as of the end of the second quarter of 2018. D. The company is discussing the possibility of opening a new store at a new zoo right at the beginning of the third quarter. This store would require company new store be opened without obtaining additional funds? How much will they have to borrow or have left over? cash payments of $15,000. Assuming the y wants a minimum cash balance of $40,000 at the beginning of the third quarter, can a
