Budget Planning Following is selected information relating to the operations of Pocketchange Company, a tile distributor. September 30, 2021 - Trial Balance information S Cash Accounts receivable.................. Inventory.... Plant and equipment, net of Acc. Dep. Accounts payable. Capital stock Retained earnings. 8,500 24,800 40.800 428,600 24,650 150,000 328,050 502.700 S 502.700 S a. Actual and budgeted sales data: S September (actual) October November December January.. 62.000 68,000 81,000 94.000 48.000 b. Gross profit is 25% of sales (or 75% Cost of Goods Sold %). c. Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following sale. The accounts receivable at September 30 are a result of the September's credit sales. d. At the end of each month, inventory on hand is to be equal to 80% of the following month's sales needs, stated at cost, e. One-half of a month's inventory purchases is paid in the month of purchase; the other half is paid in the following month. The accounts payable at September 30 are a result of September purchases of inventory. f. Monthly expenses are as follows; salaries and wages, 12% of sales, rent, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1,300 per month (includes depreciation on new assets). 9. Equipment costing S7,000 will be purchased for cash in the October and another $4,000 in November. h. The company must maintain a minimum cash balance of $5,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month; borrowing and repayments must be made in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of principles; figure interest on the whole month (2/12, 3/12, and so forth). Any unpaid interest is accrued at the end of the quarter. 81000 94000 243000 Required: Using the data above: NAME SALES 68000 1. Complete the following schedule: Schedule of Expected Cash Collections Oct. Cash sales. $ 40 800 Cred sales 24 800 Total collections $ 65,500 Nov. Dec. Quarter Dec. Quarter Nov. 50.750 2. Complete the following: Inventory Purchases Budget Oct. Budgeted cost of goods sold. S 51,000 Add: Desired ending inventory. 48,600 Total needs 99,500 Less: Beginning inventory 40.800 Required purchases. $ 58.800 + Oct. Sales X 75% cost ratio = $ ++ Nov. Sales X 75% cost ratio X 80% = $ Nov. Dec. $ Schedule of Expected Cash Disbursements-Purchases Oct. Sept.purchases. S 24,650 Oct. purchases 29,400 Nov. purchases. Dec. purchases Total disbursements for purchases........ $ 54050 Quarter 24,650 58,800 29.400 Dec. Quarter 3. Complete the folowing: Schedule of Expected Cash Dissement Operating Expenses Oct. Nov. Salaries and wages S 8,160 2.500 Other expenses 4,080 Total disbursements s 14,740 Rent Dec. Quarter 4 Complete the following cash budget: Cash Budget Cash Receipts and Disbursements) Oct. Nov. Cash balance, beginning. 8.500 Add: cash collections. 65.500 Total cash available 74,100 Less: Cash disbursements For inventory. 54,050 For expenses 14,740 For equipment 7.000 Total cash disbursements........... 75,790 Expected cash balance overdraft). (1.6901 Financing: Borrowings at beginning 7,000 Repayments (at end). Interest(at 12% per year... Total financing 7,000 Cash balance, anding. $ 5,310 6. Prepare an income statement for the quarter ended December 31. Use the functional format in preparing your income statement, as shown in the text.) 6. Prepare a balance sheet as of December 31 ANSWER SHEET NAME Pocketchange Company Income Statement For the quarter ended December 31, 2021 S 243.000 S 40,800 Sales. Beginning inventory.. Purchases.. Goods available Ending inventory.. Cost of goods sold Gross profit -0 -0 0 -0 Operating expenses: Salaries Rent... Depreciation Other expenses Net operating income. Less: Interest expenses. Net income -0 -0 0 0 -0 -0 -0 Pocketchange Company Balance Sheet December 31, 2021 Assets Cash (Part 4) Accounts receivable Inventory (Part 2) Total current assets Fixed assets - net of accumulated depreciation Total assets. -0 - 0 -0 -0 -0 -0 0 Liabilities and Equity Accounts payable Notes payable Interest payable Total liabilites Stockholders' equity: Capital stock Retained earnings Total liabilities and equity. S 150,000 -0