Handout 9-2 The following information is for the Heart's Delight Gift Store: Sales: Sales are 75% cash and 25% credit. 50% of the credit sales are collected in the month of sale and the remainder in the following month. The gross profit % is 30%. Recent and budgeted sales are: August $30,000 September 40,000 October 48,000 November 64,000 December 80,000 Operating expenses: September October November Salaries $ 10,000 $ 10,200 $ 12,000 Rent 3,000 3,000 3,000 Depreciation 1,000 1,000 1,150 Other 1,600 1,920 2,400 Total $15,600 $16,120 $18,550 Purchases: Heart's Delight desires an ending inventory of 40% of the next month's cost of goods sold but the ending inventory should never be less than $20,000. 60% of the month's purchases are paid for in the month of purchase and the remainder in the following month. Heart's Delight is planning on purchasing additional store fixtures in October at a cost of $7,000. Financing: Heart's Delight must maintain a minimum cash balance of $8,000. All borrowing is to be done at the beginning of the month and all repayments are made at the end of the month in $1,000 increments. Loans are repaid when sufficient cash is available. Interest is paid only at the time of repaying principal. The interest rate is 18% per year. Management does not want to borrow any more cash than is necessary and wants to repay as soon as cash is available. Required: Fill in the following schedules. Check figures have been provided. Budgeted Cash Receipts September m November Total Cash Sales $30,000 Credit Sales August (50%) 3,750 Sept. (50%; 50%) 5,000 Oct. (50%; 50%) Nov. (50%; 50%) Total collections $38,750 $147,750