Question
Kama Bay Outfitters is a retail fishing supply store that uses accrual accounting for its records. Information on the store operations is as follows: 1)The
Kama Bay Outfitters is a retail fishing supply store that uses accrual accounting for its records. Information on the store operations is as follows: 1)The store has budgeted sales at $220,000 for January and $200,000 for February. Given CoVid, their sales are usually much higher. 2)It expects collections to be 60% in the month of sale and 38% in the month following the sale. It expects 2% of sales to be uncollectible. 3)Gross margin is 25% of sales. 4)It purchases a total of 80% of the merchandise for resale in the month before the month of sale and 20% in the month of sale. It makes payments for merchandise in the month after it purchases it. 5)Other expected monthly expenses to be paid in cash amount to $22,600. 6)Annual depreciation is $216,000. The store balance sheet at the close of business on December 31 follows:
Assets
Cash- $44,000
Accounts receivable (net of $4,000 allowance for uncollectible accounts) - 152,000
Inventory - 264,000
Property and equipment (net of $680,000 of accumulated depriciation)- 1740,000
Total ASSETS = $2,200,000
Liabilities and shareholder's Equity
Accounts payable - $324,000
Common share - 1600,000
Retained earning - 276,000
Total liabilities and shareholder's equity - $2,200,000
a. budgeted income statement for January 2021.
b. cash budget for January 2020.
c. budgeted balance sheet as of January 31, 2020.
Step 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