Cash Collections	October	November	December	4th Quarter
September	20,000	-	-
October	35,640
November	-
December	-	-
Totals	55,640	-	-	-
Inventory Purchases	October	November	December	4th Quarter
Beginning inventory	36,000			36,000
Purchases	52,200
Goods available	88,200	-	-
Ending inventory	43,200
COGS	45,000	-	-
Cash Disbursements for Purchases and Operating Expenses	October	November	December	4th Quarter
Last month's Inventory Purchases	21,750
This month's Inventory Purchasees	26,100
Administration	2,500
General	3,600
Commission	7,200
Equipment	1,500
	62,650	-	-	-
Overall Cash Budget	October	November	December	4th Quarter
Beginning balance	8,000
Cash collections	55,640
Cash inflows	63,640	-	-
Cash payments	62,650
Net cash	990	-	-
Borrowing	4,000
Repayment-principal	-
Repayment-interest	-
Ending balance	4,990	-	-
Pro Forma Income Statement	October	November	December	4th Quarter
Revenues	60,000
COGS	45,000
Gross margin	15,000
General & Commission	10,800
Adminstration	2,500
Depreciation	900
Sales discounts	360
Bad debt expense	240
Interest expense	40
Net Income	160
Pro Forma Balance Sheet
Cash		$X,XXX
A/R (gross)	$XX,XXX
Less: AFDA*	XXXX	XX,XXX
Inventory		XX,XXX
Net current assets		XX,XXX
Fixed assets	XXX,XXX
Less: depreciation	X,XXX	XXX,XXX
Total assets		$XXX,XXX
Accounts payable		XX,XXX
Notes payable (line of credit)		X,XXX
Interest payable		XX
Current liabilities		XX,XXX
Stockholders' Equity:
Common stock		XXX,XXX
Retained earnings		XX,XXX
Total S/Equity		XXX,XXX
Total Liab. and S/E		$XXX,XXX

FILL THE BLANK WITH THE INFORMATION PROVIDES BELOW:

Data on September 30, 2009 (the end of the third quarter)

Account	Debit	Credit
Cash	8,000
Account Receivable	20,000
Inventory	36,000
Building and equipment, net of depreciation	120,000
Accounts payable		21,750
Common stock		150,000
Retained Earnings		12,250
Total	184,000	184,000

Actual sales and Forecast

Month	Sales
September (actual)	50,000
October	60,000
November	72,000
December	90,000
January 2010	48,000

1) Forecast gross accounts receivable at $36,528 on the December 31 balance sheet. In addition, to $36,000 in receivables from December sales, this amount includes unwritten off bad debts forecast for October and November.

2) Ensure 25% Gross Profit Margin on sales

+ Assume that the 25% gross profit margin applies to gross sales and not to net sales (those adjusted for cash payments or bad debts).

3) 60% of customers pay in cash ( Those customers receive a 1% discount on the invoice price)

+ Account for 1% cash discount as part of operating expenses (rather than as the more technically correct reduction of gross sales) when constructing the pro forma income statements in order to be consistent with the bullet point above.

4) 40% of customers pay on account

5) Credit sales terms are n/2EOM, credit terms requiring payment by the end of the month following purchase

6) Will collect all of the 20,000 accounts receivable balance at Sep 30 by the end of October

7) Bad debt expense and the allowance for doubtful accounts have 0 balance at Sep 30

Third quarter monthly expense

Monthly Expense Item	Amount
Administration	2,500
General	6% of sales
Commission	12% of sales
Depreciation	850

8) Inventory balance equaled 80% of the next months COGs

9) Account payable clerk pays one-half of each months inventory cost in the month of acquisition, and the remaining 50% in the following month

10) Cash purchase of 1,500 for Scanning devices in early October ( The firm will depreciate this equipment over thirty months on the straight line basis

11) Maintain an ending monthly cash balance of 4,000 to remain financially flexible

12) The company has an open line of credit with its banking partner to ensure that it can meet its cash balance goal (12% annual interest rate for all short-term borrowings.)

13) The company has 0 tax rate, due to previous tax losses