Big Banana Sporting Goods is a retail store that sells a variety of sports equipment. The companys fiscal year ends on December 31. Information to be used for the operating budget this coming year follows.

Sales and Merchandise Purchases Budget Information Sales for this coming year ending December 31 in units are expected to be as follows: First quarter 75,000 Second quarter 82,000 Third quarter 68,000 Fourth quarter 70,000 Each unit is sold for $10. Cost of goods sold is 54 percent of sales (to be used for the merchandise purchases budget). Merchandise inventory is maintained at a level equal to 25 percent of the next quarters cost of goods sold. Budgeted cost of goods sold for the first quarter of the following year is $445,500.

Operating and Interest Expenses Budget Information Management estimates all other costs, aside from advertising and depreciation, are fixed. Selling and administrative cost estimates for the first quarter of the coming year are: Salaries $140,000 Rent $ 30,000 Advertising $ 42,000 Depreciation $ 24,400 Interest expense $ 2,500 Other expenses $ 12,000 Advertising expenses for each quarter will be 12% higher than the previous quarter and will therefore increase throughout the year. Starting point FIRST STEP IS TO PROJECT YOUR SALES! 2/2

Capital Expenditure and Cash Budget Information The company plans to pay cash for property, plant, and equipment totaling $51,000 at the end of the third quarter. Note: this will cause the depreciation for the fourth quarter to increase by $1,530 to $25,930. The company expects to collect 75 percent of sales in the quarter of sale and 25 percent the quarter following the sale. Accounts receivable at the end of last year totaled $200,000, all of which will be collected during the first quarter of this coming year. All inventory purchases are on credit. The company expects to pay 60 percent of inventory purchases in the quarter of purchase and 40 percent the following quarter. Accounts payable at the end of last year totaled $64,000, all of which will be paid during the first quarter of this coming year. The cash balance at the beginning of this coming year is expected to be $58,000. A dividend payment of $250,000 of the long-term debt will be paid in Q1.

Budgeted Balance Sheet Information Assume 25 percent of fourth quarter budgeted sales will be collected in full the following year (this represents accounts receivable at the end of the fourth quarter). Big Banana started the year with long-term debt of $400,000. Expected account balances at the end of the fourth quarter are: Property, plant, and equipment (net) $610,000 Common stock $250,000 Actual retained earnings at the end of the last year totalled $303,380.

Required: Prepare a budgeted balance sheet at December 31.