Perez 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.

Required

1. October sales are estimated to be $220,000, 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	$0	$0	$0

2. 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
   Schedule of Cash Receipts
   Current cash sales
   Plus collections from A/R
   Total collections	$0	$0	$0

3. 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 months cost of goods sold. However, ending inventory of December is expected to be $13,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

   	October	November	December
   Inventory Purchases Budget
   Inventory needed	0	0	0
   Required purchases (on account)	$0	$0	$0

4. 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.)

   	October	November	December
   Schedule of Cash Payments Budget for Inventory Purchases
   Payment of current month's accounts payable
   Payment for prior month's accounts payable
   Total budgeted payment for inventory	$0	$0	$0

5. Prepare a selling and administrative expenses budget.

   	October	November	December
   Selling and Administrative Expense Budget
   Salary expense
   Sales commissions
   Supplies expense
   Utilities
   Depreciation on store fixtures
   Rent
   Miscellaneous
   Total S&A expenses	$0	$0	$0

Budgeted selling and administrative expenses per month follow.

Salary expense (fixed)	$	19,000
Sales commissions		5	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	2,400
Depreciation on store fixtures (fixed)*	$	5,000
Rent (fixed)	$	5,800
Miscellaneous (fixed)	$	2,200

*The capital expenditures budget indicates that Perez will spend $210,000 on October 1 for store fixtures, which are expected to have a $30,000 salvage value and a three-year (36-month) useful life.