Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I am having trouble with F and G For F I cannot figure out utilities and for G I am struggling with the whole thing,
I am having trouble with F and G
For F I cannot figure out utilities and for G I am struggling with the whole thing, please show calculations.
a. October sales are estimated to be $125,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 8 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 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $6,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 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) $9,000 5% of Sales 2% of Sales $ 700 $2,000 $2,400 $ 600 *The capital expenditures budget indicates that Camden will spend $82,000 on October 1 for store fixtures, which are expected to have a $10,000 salvage value and a three-year (36-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. Camden 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $6,000 cash cushion. Prepare a cash budget. December $ October November Schedule of Cash Payments for S&A Expenses Salary expense $ 9,000 $ 9,000 Sales commissions 0 6,250 Supplies expense 2,500 2,700 Utilities 0 700 9,000 6,750 2,916 700 Depreciation on store fixtures 0 2,000 2,400 2,000 2,400 Rent 2,400 Miscellaneous 600 600 600 CA Total payments for S&A expenses 14,500 $ 23,650 $ 24,366 Cash Budget October Novomber December Section 1: Cash Receipts Beginning cash balance Add: Cash receipts $ 0 50,000 129,000 139,320 50,000 129,000 139,320 82,084 83,806 Total cash available Section 2: Cash Payments For inventory purchases For selling and administrative expenses Interest expense Purchase of store fixtures 58,170 14,500 0 82,000 154,670 82,084 83,806 Total budgeted disbursements Section 3: Financing Activities Surplus (shortage) Borrowing (repayment) Ending cash balance (104,670) 46,916 55,514 $ (104,670) $ 46,916 $ 55,514Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started