Jordan 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. Part 1 of 2 20 points Required a. October sales are estimated to be $200,000, of which 35 percent will be cash and 65 percent will be credit. The company expects sales to increase at the rate of 25 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 $12,800. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 percent in the following month. Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow. e. Budgeted selling and administrative expenses per month follow, Part 1 of 2 20 points Salary expense (fixed) $18,800 Sales commissions 58 of Sales Supplies expense 2% of Sales Utilities (fixed) $ 2,200 Depreciation on store fixtures (fixed)* $ 4,800 Rent (fixed) $ 5,600 Miscellaneous (fixed) $ 2,000 "The capital expenditures budget Indicates that Jordan will spend $200,800 on October 1 for store fixtures, which are expected to have a $28,000 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. Jordan borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may Part 1 of 2 g. Jordan 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 $20,000 cash cushion, Prepare a cash budget 20 points Answer is not complete. Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required Required G Jordan borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made 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 $20,000 cash cushion. Prej a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Part 1 of 2 Required A Required B Required C Required D Required E Required F Required G 20 points Jordan borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made 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 $20,000 cash cushion. Prep a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December Section 1: Cash Receipts Beginning cash balance 0$ 20,800 $ 43,440 Add: Cash receipts 70,000 217,500 271,875 Total Cash available 70,000 238,300 315,315 Section 2. Cash Payments For inventory purchases 81,000 146,250 170,430 Ferminieratave an 42 AM 17 16 Part 1 of 2 70,000 70,000 217,500 238,300 271,875 315,315 20 points 146,250 43,600 Add: Cash receipts Total Cash available Section 2: Cash Payments For inventory purchases For selling and administrative expenses Purchase of store fixtures Interest expense Beginning cash balance Total budgeted disbursements Section 3: Financing Activities Surplus (shortage) Borrowing (repayment) 170,430 47.350 81,000 30,400 200,800 0 OOOO OOOOO 0 2,630 28,200 220,680 2,372 20.000 240.152 312,200 (242,200) 263,000 17,620 25,820 43,440 75.163 51,723 % 126,886 IS 20.800 $ $
