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1 Problem 7-23A (Algo) Part 1 Required Puntoa 35/50 Swed a. October sales are estimated to be $230,000, of which 45 percent will be cash and 55 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 desves 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 $12,400. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases e. Budgeted selling and administrative expenses per month follow Reference Salary expense (fixed) 110,400 Sales commissions 54 of sales Supplies expense 21 of Sales Utilities (fixed) $1,000 Depreciation on store fixtures (fixed). $4,400 Rent (fixed) $ 5,200 Miscellaneous (fixed) The capital expenditures budget indicates that Fanning will spend $182,400 on October for store fixtures, which are expected to have a $24,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. t. Utilities and sales commissions are paid the month after they we incurred all other expenses are paid in the month in which they are incurred. Prepare a cash payments budget for selling and administrative expenses 9. Fanning borrows funds, in increments of $1000, 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 $16.000 cash cushion. Prepare a cash budget 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 are incurred. Prepare a cash payments budget for selling and administrative expenses. g. Fanning borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in the last day of the month. To be prudent, the company desires to maintain a $16,000 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 $230,000, of which 45 percent will be cash and 55 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 $ 230,000 $ 276,000 $ 198,720 103,500 124,200 149,040 Total budgeted sales $ 333,500 $ 400,200 $ 347,760 Sales on account Hard Required B > *Red text Victes no response was expected in a call or a formula-based calculation is incorrect; no points deducted Complete this question by entering your answers in the tabs below. Required A Required B Required Required 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 $ 230,000 $ 276,000$ 331,200 Plus collections from AR 126,500 151,800 Total collections $ 230,000 S 402,600 483,000 Required A Required) *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no pointa deducted Complete this question by entering your answers in the tabs below. Required A Required B Required cRequired D Required E Required 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 $12,400. Assume that all purchases are made on account. Prepare an inventory purchases budget. October November December Inventory Purchases Budget Budgeted cost of goods sold $ 138,000 $ 165,600 $ 198,720 Plus: Desired ending inventory 16,560 19,872 12,400 Inventory needed 154,560 185,472 211,120 Less: Beginning inventory 0 16,560 11,923 Required purchases (on account) 154,560 $ 168,912 $ 199,197 $ Required 8. Required D > *And text indicates no response was expected in a cell or a formula-based calculation is incorrect, no points deducted Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 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 $ 123,648$ 128,770 $ 95,767 X Payment for prior month's accounts payable 0 30,192 23,9423 Total budgeted payment for inventory $ 123,648 $ 158,962 $ 119,709 Red text indicates no response was expected in a cell or a formule-based calculation is incorrect; ne points deducted Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G Prepare a selling and administrative expenses budget. November December $ October Selling and Administrative Expense Budget Salary expense $ 18,400 Sales commissions 11,500 Supplies expense 4,600 Utilities 1,800 Depreciation on store fixtures 4,400 Rent 5,200 Miscellaneous 1,600 Total S&A expenses $ 47,500 18,400 13,800 5,520 1,800 4,400 5,200 1,600 50,720 18,400 9.936 3,974 1,800 4,400 5,200 1,600 45,310 $ *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. Complete this question by entering your answers in the tabs below. Required A Required B Required 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. November December $ 0 October Schedule of Cash Payments for S&A Expenses Salary expense 18,400 Sales commissions Supplies expense 4,600 Utilities Depreciation on store fixtures Rent 5,200 Miscellaneous 1,600 Total payments for S&A expenses 29,800 0 18,400 $ 18,400 11,500 13,800 5,520 3,974 1,800 1,800 0 0 5,200 5,200 1,600 1,600 $ 44,020 $ 44,774 0 SI Red text indicates no response was expected in a ceil ce a formulo-based calculation is incorrect; no points deducted. Required A Required B Required Required D Required E Required F Required G Fanning 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 $16,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December Section 1: Cash Receipts Beginning cash balance $ Add: Cash receipts 230,000 402.500 483,000 Total Cash available 230,000 402.500 483,000 Section 2: Cash Payments For inventory purchases 123,648 158,962 X 119,709 For selling and administrative expenses 29,800 44,020 44,774 Interest expense 0 0 Purchase of store forures 0 0 153,448 202.982 164483 Total budgeted disbursements Section 3: Financing Activities Surplus (shortage) Borrowing (repayment) Ending cash balance 76,552 199,518 318,517 $ 76,552 $ 199,518 $ 318,517 *Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted Ne moration Required H Required 1 Required) Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) FANNING COMPANY Pro Forma Balance Sheet December 31, year 1 Assets Cash Accounts receivable Inventory Store fixtures Accumulated depreciation Book value of fixtures 0 Total assets Llabilities Accounts payable Sales commissions payable Utilities payable Line of credit liability 0 0 Equity Retaired earnings >> Total liabilities and equity $ 0 (Required H Required J > Required H Required 1 Required) Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.) FANNING COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, year 1 Cash flows from operating activities Cash receipts from customers Cash payments for inventory Cash payments for selling and administrative expenses Cash payments for interest expense Net cash flows from operating activities Cash flows from investing activities Cash payment for store fixtures Cash flow from financing activities Net inflow from line of credit Net increase in cash Plus: Beginning cash balance Ending cash balance $ 0 $ 0 Required I Required Red text indicates na response was expected in a cell or a formula-based calculation is incorrect, no points deducted