ABC Company is considering whether to open a new distribution center. The center would open January 1, 2015. To make the decision, the planning committee requires a master budget for the centers first quarter of operation (January, February, and March of 2015).

Required

You are to construct the first quarter master budget based on the following expectations:

e. All inventory purchases are on account. The company pays 70% of accounts payable in the month of purchase. It pays the remaining 30% in the following month. Prepare a schedule of expected cash payments for inventory purchases.

f. Use the information developed in requirements d and e to determine the amount of cost of goods sold on the first quarter pro forma income statement and the amounts of ending inventory and accounts payable on the March 31 pro forma balance sheet.

g. Budgeted monthly selling and administrative expenses are:

Salary Expense (Fixed)	$24,000
Sales Commissions	5% of Sales
Supplies Expense	2% of Sales
Utilities (Fixed)	$ 1,400
Depreciation on Center Equipment (Fixed)*	$ 750
Rent (Fixed)	$ 3,600