Gibson Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new 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.

Information:

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.

The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale.

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 months cost of goods sold. However, ending inventory of December is expected to be $12,700. Assume that all purchases are made on account.

The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month.

Budgeted selling and administrative expenses per month follow.

Salary expense (fixed)	$	18,700
Sales commissions		4	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	2,100
Depreciation on store fixtures (fixed)*	$	4,700
Rent (fixed)	$	5,500
Miscellaneous (fixed)	$	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.

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.

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.

\begin{tabular}{|l|l|l|l|l|l|l|l|} \hline Required A & Required B & Required C & Required D & Required E & Required F & Required G & Required H \\ \hline \end{tabular} 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