Chapter 8 Canvas Homework - SHOW YOUR WORK FOR CREDIT Schedules of Expected Cash Collections and Disbursements; Budgeted Income Statement and Budgeted Balance Sheet. Crow Enterprises is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below: Crow Enterprises Balance Sheet June 30 Assets Cash $ 80,000 Accounts receivable 135,000 Inventory 41,250 Plant and equipment, net of depreciation 211,000 Total assets $ 457,250 Liabilities and Stockholders' Equity Accounts payable $ 72,000 Common stock 345,000 Retained earnings 50,250 Total liabilities and stockholders' equity $ 467,250 Crow's managers have made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $220,000, $240,000, $230,000, and $250,000, respectively. 2. All sales are on credit and all credit sales are collected. Each month's credit sales are collected 35% in the month of sale and 65% in the month following the sale. All of the accounts receivable at June 30 will be collected in July. 3. Each month's ending inventory must equal 25% of the cost of next month's sales. The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July. 4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34,000 relates to expenses that are paid in the month they are incurred. 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30. Required: 1. Prepare a schedule of expected cash collections for July, August, and September. 2. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September also showing the 3rd quarter totals. 3. Prepare an income statement that shows net operating income for the quarter ended September 30. 4. Prepare a balance sheet as of September 30. Don't forget about S&A expenses, some cash, some noncash. 1. Cash Collections for Q3 Septembe July August r Q3 From A/R From July sales From Aug sales From Sep sales Total cash collections 2. You are provided with the following merchandise purchase budget for Q3. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September also showing the 3rd quarter totals. Budgeted COGS (75% of sales) add: desired ending inventory (25%) equals: total needs less: beginning inventory equals: required purchases July 165,000 45,000 210,000 41,250 168,750 August September 180,000 172,500 43,125 46,875 223,125 219,375 45,000 43,125 178,125 176,250 Q3 517,500 46,875 564,375 41,250 523,125 2b. Schedule of expected cash disbursements Septembe Jul August r Q3 From A/P From July purchases From Aug purchases From Sep purchases Total cash disbursements 3. Prepare a budgeted income statement Crow Enterprises Income Statement For the Quarter Ended September 30 Sales Cost of Goods Sold Gross Margin Selling & Admin Expenses Net Operatint Income 4. Prepare a budgeted balance sheet Crow Enterprises Balance Sheet September 30 Assets Cash Accounts receivable Inventory Plant & equipment, net 193,000 Total Assets 553,500 Liabilities & Stockholders' Equity Accounts payable Common stock 345,000 Retained earnings 102,750 Total Liabilities & Stockholders' Equity
