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Required information Problem 7-23A (Algo) Preparing a master budget for retail company with no beginning account balances LO 7-2,7-3, 7-4, 7-5, 7-6 [The following information applies to the questions displayed below) Walton 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 Problem 7-23A (Algo) Part 1 Required a. October sales are estimated to be $390,000, of which 40 percent will be cash and 60 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 $13,700. 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, Salary expense (fixed) $19,700 Required information Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow. Salary expense (fixed) $19,700 Sales commissions 41 of Sales Supplies expense 21 of Sales Utilities (fixed) $ 3,100 Depreciation on store fixtures (fixed) $ 5,700 Rent (fixed) $ 6,500 Miscellaneous (fixed) $ 2,900 *The capital expenditures budget indicates that Walton will spend $173,800 on October 1 for store fixtures, which are expected to have a $37,000 salvage value and a two-year (24-month) useful life Use this information to prepare a selling and administrative expenses budget. . 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. Walton 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 $29,000 cash cushion, Prepare a cash budget. amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in cast on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash budget. Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required Required G October sales are estimated to be $390,000, of which 40 percent will be cash and 60 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 Required B> Required information amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per month in on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash budge Complete this question by entering your answers in the tabs below. 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 Schedule of Cash Receipts Current cash sales Plus collections from A/R Total collections $ 0 $ 0 $ TO LLUM Required A Required B Required 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 goods sold. However, ending inventory of December is expected to be $13,700. Assume that all purchases are made on account. Prepare an inventory purchases budget. October November December Inventory Purchases Budget Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed 0 0 Less: Beginning inventory Required purchases (on account) $ 0 $ 0 $ 0 0 Lay also pays its vendors on the last day of the month. It pays interest of 2 percent per mont on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash bu Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D Required E Required F Required G 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. (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 $ amount available. The company also pays its vendors on the last day of the month. It pays interest of 2 percent per on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cas Complete this question by entering your answers in the tabs below. Required A Required B Required Required D Required E Required F Required G Prepare a selling and administrative expenses budget. November December October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses $ 0 0 on the last day of the month. To be prudent, the company desires to maintain a $29,000 cash cushion. Prepare a cash bu Complete this question by entering your answers in the tabs below. Required A Required B Required 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. October November December Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses $ 0 S 0 $ 0 Required E Required > 3 Walton 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 $29,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December 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 0 0 0 0 0 0 0 0 0 Total budgeted disbursements Section 3: Financing Activities Surplus (shortage) Borrowing (repayment) Ending cash balance $ 0 $ 0 $ 0 Problem 7-23A (Algo) Preparing a master budget for retail company with no beginning account balances LO 7-2,7-3, 7-4, 7-5, 7-6 [The following information applies to the questions displayed below.) Walton 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. Problem 7-23A (Algo) Part 2 h. Prepare a pro forma income statement for the quarter. 1. Prepare a pro formo balance sheet at the end of the quarter. J. Prepare a pro forma statement of cash flows for the quarter. Complete this question by entering your answers in the tabs below. Required H Required I Required) Prepare a pro forma income statement for the quarter. WALTON COMPANY Pro Forma Income Statement For the Quarter Ended December 31. year 1 h. Prepare a pro forma income statement for the quarter. 1. Prepare a pro forma balance sheet at the end of the quarter. J. Prepare a pro forma statement of cash flows for the quarter. Complete this question by entering your answers in the tabs below. Required H Required 1 Required) Prepare a pro forma income statement for the quarter. WALTON COMPANY Pro Forma Income Statement For the Quarter Ended December 31, year 1 Sales revenue Cost of goods sold Gross margin Seling and administrative expenses Operating income Interest expense Net income s 0 0 0 Required> Required information Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) WALTON COMPANY Pro Forma Balance Sheet December 31, year 1 Assets Cash Accounts receivable Inventory Store fixtures Accumulated depreciation Book value of fixtures Total assets Liabilities Accounts payable Utilities payable Sales commissions payable Line of credit liability 0 0 $ Equity Retained earnings $ 0 Total liabilities and equity ou information Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign. WALTON COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, year 1 Cash flows from operating activities Cash receipts from customers 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 $