Campbell Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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 $370,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 30 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 $12,300. Assume that all purchases are made on account. Prepare an inventory purchases budget. 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. e. Budgeted selling and administrative expenses per month follow. Salary expense (fixed) $18,300 Sales commissions 4% of Sales Supplies expense 2% of Sales Utilities (fixed) $ 1,700 Depreciation on store fixtures (fixed)* $ 4,300 Rent (fixed) $ 5,100 Miscellaneous (fixed) $ 1,500 "The capital expenditures budget indicates that Campbell will spend $126,200 on October 1 for store fixtures, which are expected to have a $23,000 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. Campbell 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 $15,000 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. Campbell 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 $15,000 cash cushion. Prepare a cash budget. (Any repayments should be indicated with a minus sign.) Show less Cash Budget October November December $ 148,000 148,000 414,400 414,400 20,727 538,720 559,447 Section 1: Cash Receipts Beginning cash balance Add: Cash receipts Total cash available Section 2: Cash Payments For inventory purchases For selling and administrative expenses Purchase of store fixtures 228,438 347,733 51,020 360,798 58,346 32,300 126,200 386,938 398,753 419,144 Total budgeted disbursements Section 3: Financing Activities Borrowing (repayment) Interest expense Ending cash balance (238,938) 15,647 5,080 140,303 4,863 $ (238,938) S 20,727 $ 145,166 Prepare a pro forma income statement for the quarter. CAMPBELL COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 Sales revenue 0 0 $ 0 Prepare a pro forma balance sheet at the end of the quarter. (Am sign.) CAMPBELL COMPANY Pro Forma Balance Sheet December 31, Year 1 Assets 0 $ 0 Total assets Liabilities Equity Total liabilities and equity Prepare a pro forma statement of cash flows for the quarter. (Cash outflows should be indic CAMPBELL COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flows from operating activities $ 0 Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities $ 0