Gibson Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a mew 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 $320,000, 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 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 $12,700. 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. 4 of Sales 21 of sales Salary expense (fixed) $10,700 Sales commissions Supplies expense Utilities (fixed) $2,100 Depreciation on store fixtures (fixed) $4,700 $ 5,500 $1,900 Rent (fixed) Miscellaneous (fixed) The capital expenditures budget indicates that Gibson will spend $139,800 on October 1 for store fixtures, which are expected to have a $27,000 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. Gibson 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 $19.000 cash cushion. Prepare a cash budget. Salary expense (fixed) Sales commissions Utilities (fixed) Supplies expense Depreciation on store fixtures (fixed)* Rent (fixed) Miscellaneous (fixed) $18,700 4 of Sales 21 of Sales $ 2,100 $ 4,700 $ 5,500 $1,900 The capital expenditures budget indicates that Gibson will spend $139,800 on October 1 for store fixtures, which are expected to have a $27,000 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. Gibson borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any h. 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 $19,000 cash cushion. Prepare a cash budget. 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. 1. Uunues and sales commissions are paid une monun enter they are incurred; an oiner expenses are paid in une moniin in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. g. Gibson 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 $19,000 cash cushion. Prepare a cash budget. 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 A Required B Required C Required D Required E Required F Required G Required H Required I Required] October sales are estimated to be $320,000, 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 $ 144,000 $ 172,800 $ 207,360 Sales on account 176,000 211,120 253.344 Total budgeted sales $ 320,000 $ 383,920 $ 460,704 Required A 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 Required H Required I Required J. 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 $ 0 $ 0 $ 0 23449 D rences Statement or ows for the quarter. 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 Required H Required 1 Required) 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 $12,700. Assume that all purchases are made on account. Prepare an inventory purchases budget. Inventory Purchases Budget October November December Inventory needed Required purchases (on account) S 0 $ 05 Required B Required D > Ces and sales commissions are paid the monun aner they are incurred, an outer expenses are paid in the monum in which they are incurred. Prepare a cash payments budget for selling and administrative expenses. g. Gibson 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 $19,000 cash cushion. Prepare a cash budget. 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. Check 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 Required H Required I Required] 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 Payment for prior month's accounts payable Total budgeted payments for inventory $ 05 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 Required H Required I Required) Prepare a selling and administrative expenses budget. October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utities Depreciation on store fixtures Rent Macellaneous Total S&A expenses November December $ 1. Unues and sales commissions are para une monin aner uney are incurred, an ouner expenses are paid in the monin in which y are incurred. Prepare a cash payments budget for selling and administrative expenses. g. Gibson 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 $19,000 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. 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 Required H Required I Required) 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 Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utities Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses November December 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 Required H Required I Required] Gibson 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 $19,000 cash cushion. Prepare a cash budget. (Any repayments should be indicated with a minus sign.) Show less A Section 1: Cash Receipts Total cash available Section 2: Cash Payments Total budgeted disbursements Section 3: Financing Activities Cash Budget October November December 0 0 0 0 0 0 0 $ 0 $ 0 $ 0 Prev 1 of 1 Next 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 Require H Prepare a pro forma income statement for the quarter. GIBSON COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 0 $ Required I Required J Ch Required A Required B Required C Required D Required E Required F Required G 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.) GIBSON COMPANY Pro Forma Balance Sheet December 31, Year 1 18 Assets es 0 Total assets Liabilities $ 0 Equity Total liabilities and equity < Required H Required J > 2:23:04 Required A Required B Required C Required D Required E Required F Required G Required H Required I Required 3 Prepare a pro forma statement of cash flows for the quarter. (Cash outflows should be indicated with a minus sign.) GIBSON COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flows from operating activities int D ences Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities $ 0 $