Campbell Company is a retall 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: Problem 7-23A Part 1 Required a. October sales are estimated to be $320,000, 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 60 percent of sales. The company desires to maintain a minimum ending Inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $14,000. 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) $20,000 Sales commissions 5% of sales Supplies expense 2% of Sales utilities (fixed) $3,400 $ 6,000 Depreciation on store fixtures (fixed)* Rent (fixed) $ 6,000 Miscellaneous (fixed) $3,200 "The capital expenditures budget indicates that Campbell will spend $256,000 on October 1 for store fixtures, which are expected to have a $40,000 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. 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $32,000 cash cushion. Prepare a cash budget. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G October sales are estimated to be $320,000, 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. October November December Sales Budget Cash sales Sales on account Total budgeted sales Required B > Haared A Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G 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 < Required A Required C Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G 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 month's cost of goods sold. However, ending inventory of December is expected to be $14,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. October November December Inventory Purchases Budget. Inventory needed 4 Required purchases (on account) Required D > < Required B Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G 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. (Round your final answers to the nearest whole dollar amounts. 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 payment for inventory < Required C Required E> 4 Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Prepare a selling and administrative expenses budget. October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses November < Required D December Required F > Required G Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G 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 Required < Required E > Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $32,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less A Cash Budget November December Cash available Less: Payments Total budgeted payments Payments minus receipts Financing activity Required G October < Required F 2 h. Prepare a pro forma Income statement for the quarter. 1. 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 J Prepare a pro forma income statement for the quarter. CAMPBELL COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019 h. Prepare a pro forma Income statement for the quarter. 1. 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 J Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) CAMPBELL COMPANY Pro Forma Balance Sheet December 31, 2019 Assets Total assets Liabilities Equity Total liabilities and equity h. Prepare a pro forma income statement for the quarter. 1. 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 1 Required J Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.) CAMPBELL 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 < Required I Required 3