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{The following information applies to the questions displayed below] Solomon Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. 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 $310,000, 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 $13,300. 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 Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed)* Rent (fixed) Miscellaneous (fixed) $19,300 4% of Sales 2% of Sales $ 2,700 $ 5,300 $ 6,100 $ 2,500 *The capital expenditures budget indicates that Solomon will spend $160,200 on October 1 for store fixtures, which are expected to have a $33,000 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. Solomon 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 $25,000 cash cushion. Prepare a cash budget Required A Required B Required 6 Required D Required E Required F Required G October sales are estimated to be $310,000, 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 Sales on account Total budgeted sales 139,500 170,500 310,000 167 400 204,600 $ 372,000 $ 200,880 245,520 $ 446,400 $ Required A Required B Required Required D 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 S 139 500 $ 167 400 S Schedule of Cash Receipts Current cash sales Plus collections from AR Total collections 200,880 204,600 170 500 337 900 $ 139,500 S S 405 480 Required A Required B Required C Required D Required E Required F Required G 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 coods sold. However, ending inventory of December is expected to be $13,300. Assume that all purchases are made on account. Prepare an inventory purchases budget. October November December S S Inventory Purchases Budget Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) 217,000 52,080 269,080 260,400 62.496 322,896 52,080 270,816 312,480 13,300 325,780 62,496 263,284 0 $ 269,080 S $ Required A Required B Required C 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.) November December 9 October Schedule of Cash Payments Budget for Inventory Purchases Payment of current month's accounts payable $ 215,264 Payment for prior month's accounts payable 0 Total budgeted payments for inventory 215,264 s 210,627 216,653 53,816 270 469 54 163 $ 264.790 $ $ Required A Required B Required C Required D Required E Require Prepare a selling and administrative expenses budget. November December S October Selling and Administrative Expense Budget Salary expense 19,300 Sales commissions 12,400 Supplies expense 6,200 Utilities 2,700 Depreciation on store fixtures 5,300 Rent 6.100 Miscellaneous 2,500 Total S&A expenses 54,500 19,300 14,880 7,440 2,700 5,300 6.100 2,500 58,220 19,300 17,856 8,928 2,700 5,300 6.100 2.500 62.684 $ $ Required A Required B Required C 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 S S October Schedule of Cash Payments for S&A Expenses Salary expense $ 19,300 Sales commissions 0 Supplies expense 6,200 Utilities 0 Depreciation on store fixtures 0 Rent 6,100 Miscellaneous 2,500 Total payments for S&A expenses S 34,100 19,300 12,400 7440 2,700 19,300 14,880 8,928 2,700 0 6.100 2,500 54,408 0 6,100 2,500 50,440 $ $ Solomon 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 $25,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December $ $ O 0$ 139.500 139 500 25 936 337 900 363 836 25 000 405 480 430 480 Section 1 Cash Receipts Beginning cash balance Add Cash receipts Total cash available Section 2 Cash Payments For inventory purchases For selling and administrative expenses Purchase of store fixtures Interest expense SIS 264.790 215,264 34 100 160 200 270 469 50 440 54 408 OOOOO 000 0 0 0 5,920 0 5,680 0 0 409 564 326 829 324,878 Total budgeted disbursements Section 3. Financing Activities Surplus (shortage) Borrowing (repayment) Ending cash balance (270,064) 296,000 25 936 37,007 (12,007) 25,000 105,602 (80,602) 25,000 S $ S Required information The following information applies to the questions displayed below.) Solomon Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. 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: 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 Required H Required I Required) Prepare a pro forma income statement for the quarter. SOLOMON COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019 Sales revenue $ 1,128,400 Cost of goods sold (789,880) Gross margin 338,520 Selling and administrative expenses (175,404) Operating income 163, 116 Interest expense (11,600) Net income $ 151,516 Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) SOLOMON COMPANY Pro Forma Balance Sheet December 31, 2019 Assets 0 Cash Accounts receivable Inventory Store fixtures Less Accumulated depreciation Book value of fixtures Total assets Liabilities Accounts payable Sales commissions payable Utilities payable Line of credit liability 0 OOO Equity Retained earnings 0 Total liabilities and equity S 0 Required H Required I Required) Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.) SOLOMON COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, 2019 Cash flows from operating activities Cash receipts from customers $ 0 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