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F Budget Planning Following is selected information relating to the operations of Pocketchange Company, a tile distributor September 30, 2021 - Trial Balance information 0 1 Cash... $ 8,500 2 Accounts receivable. 24,800 Inventory 40,800 14 Plant and equipment, net of Acc. Dep. 428,600 15 Accounts payable 24,650 16 Capital stock..... 150,000 17 Retained earnings 328,050 18 $ 502.700 $ 502,700 19 Actual and budgeted sales data: $ 20 a 21 22 23 24 25 20 September (actual) October November December... January 62,000 68,000 81,000 94,000 48.000 26 b. Gross profit is 25% of sales (or 75% Cost of Goods Sold %). 25 30 G Sales are 60% for cash and 40% on credit. Credit sales are collected in the month following 31 sale. The accounts receivable at September 30 are a result of the September's credit sales. 32 23 d. At the end of each month, inventory on hand is to be equal to 80% of the following 54 month's sales needs, stated at cost. 35 One-half of a month's inventory purchases is paid in the month of purchase; the other 37 half is paid in the following month. The accounts payable at September 30 are a result of 38 September purchases of inventory. 30 40. Monthly expenses are as follows: salaries and wages, 12% of sales; rent. $2.500 per 41 month other expenses (excluding depreciation), 6% of sales. Assume that these expenses 12 are paid monthly. Depreciation is $1,300 per month (includes depreciation on new assets) 43 44 9 Equipment conting $7,000 will be purchased for cash in the October and another $4,000 in November 46 h The company must maintain a minimum cash balance of $5,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month: borrowing and repayments must be made in multiples of $1,000. The annual Interest rate is 12%. Interest is paid only at the time of repayment of principles figure interest on the whole month (2/12, 3/12, and so forth). Any unpaid interest in accrued at the end of the quarter. 40 51 13 66 Required: Using the data above TIMALES B G H 81000 240000 58 Required: Uning the data above: 57 SALES 68000 se 1. Complete the following schedule 9 Schedule of Expected Cash Collections Oct. 61 Cash sales $ 40,800 62 Credit sales 24,800 Total collections.. $ 66,600 Nov. Dec Quarter Dec. Nov. 60,750 Quarter 40,800 65 2. Complete the following 66 Inventory Purchases Budget 67 Oct. 68 Budgeted cost of goods sold. $ 51,000 80 Adet Desired ending inventory. + 48,600 70 Total needs. 99,600 71 Loss: Beginning inventory. 72 Required purchases $ 58.800 73 Oct Sales X 75% cost ratio $ 74 ++ Nov. Sales X 75% cost ratio X 80%= $ 75 76 Schedule of Expected Cash Disbursements Purchases Oct. 78 Sep purchases... $ 24,650 79 Oct. purchases 29.400 80 Nov. purchase 81 Dec purchases Total disbursements for purchases 54.050 Nov. Dec. $ Quarter 24,650 58,800 29.400 Quarter Dec Quarter 843. Complete the following 85 Schedule of Expected Cash Disbursements-Operating Expenses Oct Nov. Dec 87 Salaries and wage. $ 8.160 88 Rort 2500 90 Other expenses 4,080 90 Total disbursements $ 14.740 91 24 Complete the following cash budget 93 Cash Budget (Cash Receipts and Disbursement) 94 Oct Nov. 95 Cash balance beginning $ 8,500 96 Add: cash collections 66,600 97 Total cash available 74,100 98 Less: Cash disbursements 99 For Inventory 54,050 100 For expenses 101 For equipment 7,000 102 Total cash disbursements 75.790 103 Expected cash balance (overdraft) (1.080) 104 Financing 105 Borrowings (et beginning) 7,000 106 Repayments (alond... 107 interest (at 12% per year) 108 Total financing 100 Cash balance, ending 5 5,310 110 1115. Prepare an income statement for the quarter ended December 31 (Une the functional format in preparing your income statement, as shown in the bot.) 113 14,740 7.000 112 C D B interest ( 12% per year) Total financing Cash balance, ending 7,000 5,310 $ 5. Prepare an income statement for the quarter ended December 31. (Use the functional format in preparing your income statement, as shown in the text) 6 Prepare a balance sheets December 31 ANSWER SHEET NAME Pocketchange Company Income Statement For the quarter ended December 31, 2021 $ 243,000 $ 40.800 2 Sales 3 Beginning Inventory 4 Purchases 5 Goods available Ending inventory Cost of goods sold Gross profit 9 Operating expenses 19 Salaries 2 Rent... 13 Depreciation 34 Other expenses es Net operating income 36 Less. Interest expenses 37 Net Income 99 Pocketchange Company 00 Balance Sheet December 31, 2021 13 44 Assets 45 Cash (Part 4 46 Accounts receivable 47 Inventory (Part 2) 48 Total current assets 40 Fixed assets - net of accumulated depreciation 50 Total assets Labilities and Equity 53 Accounts payable 54 Notes payable 198 Interest payable 150 Total liabilites 157 Stockholders' equity 15 Capital stock 150 Retained earnings Total liabities and equity $ 150.000 163