Camden Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. The company president formed a planning committee to prepare a master budget for the first three months of operation. As budget coordinator, you have been assigned the following tasks:

Required

A. October sales are estimated to be $125,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 8 percent per month. Prepare a sales budget.

	October	November	December
Sales Budget
Cash sales
Sales on account
Total budgeted sales

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.

	October	November	December
Schedule of Cash Receipts
Current cash sales
Plus collections from A/R
Total collections

C. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next months cost of goods sold. However, ending inventory of December is expected to be $6,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next months cost of goods sold. However, ending inventory of December is expected to be $6,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

	October	November	December
Inventory Purchases Budget
Inventory needed
Required purchases (on account)

D. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.

	October	November	December
Schedule of Cash Payments Budget for Inventory Purchases
Payment of current month's accounts payable
Payment for prior month's accounts payable
Total budgeted payments for inventory

E. Budgeted selling and administrative expenses per month follow:

	October	November	December
Selling and Administrative Expense Budget
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total S&A expenses

Salary expense (fixed)	$	9,000
Sales commissions		5	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	700
Depreciation on store fixtures (fixed)*	$	2,000
Rent (fixed)	$	2,400
Miscellaneous (fixed)	$	600

*The capital expenditures budget indicates that Camden will spend $82,000 on October 1 for store fixtures, which are expected to have a $10,000 salvage value and a three-year (36-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.

	October	November	December
Schedule of Cash Payments for S&A Expenses
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total payments for S&A expenses

G. Camden 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $6,000 cash cushion. Prepare a cash budget.

Cash Budget
	October	Novomber	December
Cash available
Less: Payments
Total budgeted payments
Payments minus receipts
Financing activity

H. Prepare a pro forma income statement for the quarter.

CAMDEN COMPANY
Pro Forma Income Statement
For the Quarter Ended December 31, 2019

I. Prepare a pro forma balance sheet at the end of the quarter.

CAMDEN COMPANY
Pro Forma Balance Sheet
December 31, 2019
Assets
Total assets
Liabilities
Equity
Total liabilities and equity

J. Prepare a pro forma statement of cash flows for the quarter.

CAMDEN COMPANY
Pro Forma Statement of Cash Flows
For the Quarter Ended December 31, 2019
Cash flows from operating activities
Net cash flows from operating activities
Cash flows from investing activities
Cash flow from financing activities