ACC 121 ch 7
a. October sales are estimated to be $340,000, of which 35 percent will be cash and 65 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 $12,500. 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) $18,500 Sales commissions 4 % of Sales Supplies expense 2% of Sales Utilities (fixed) $ 1,980 Depreciation on store fixtures (fixed) $4,500 "Rent (fixed) $ 5,380 Miscellaneous (fixed) $ 1,700 *The capital expenditures budget indicates that Finch will spend $133,000 on October 1 for store fixtures, which are expected to have a $25,000 salvage value and a two year (24-month) useful life Use this information to prepare a selling and administrative expenses budget f. 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. Finch 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 $17000 cash cushion. Prepare a cash budget h. Prepare a pro forma income statement for the quarter. i. Prepare a pro forma balance sheet at the end of the quarter. j. Prepare a pro forma statement of cash flows for the quarter. Complete this question by entering your answers in the tabs below Required H Required I Required) Prepare a pro forma income statement for the quarter. FINCH COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019 0 Cost of goods sold 0 Interest expense Rent expense 0 Sales revenue Required H Required 1 Required) Prepare a pro forma income statement for the quarter. FINCH COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019 0 $ 0 Required H Required l > O Required information Required H Required 1 Required) Prepare a pro forma balance sheet at the end of the quarter. (Amd FINCH COMPANY Pro Forma Balance Sheet December 31, 2019 Assets 0 0 Total assets Liabilities Equity Total liabilities and equity Required information Required H Required I Required ] Prepare a pro forma balance sheet at the end of the quarter. (Amounts FINCH COMPANY Pro Forma Balance Sheet December 31, 2019 Assets Accounts payable Accounts receivable Accumulated depreciation 0 0 Book value of fixtures 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 b FINCH COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, 2019 Cash flows from operating activities $ 0 Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities $ Required H Required I Required) Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by FINCH COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, 2019 Cash flows from operating activities ces $ 0 Cash payment for store fixtures Cash payments for selling and administrative expenses Cash payments for interest expense Cash payments for inventory
