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Prepare a quarterly capital expenditure budget Prepare a quarterly cash budget (Hint: Merchandising companies have merchandise purchases rather than direct materials purchases. Merchandising companies do

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  1. Prepare a quarterly capital expenditure budget
  2. Prepare a quarterly cash budget (Hint: Merchandising companies have merchandise purchases rather than direct materials purchases. Merchandising companies do not have direct labor or manufacturing overhead.)
  3. Prepare a budgeted balance sheet at December 31 . (Hint: merchandising companies have merchandise inventory rather than raw materials inventory or finished goods inventory.)
36. Merchandising Company Master Budget. Big Apple Sporting Goods is a retail store that sells a variety of sports equipment. The compary's fiscal year ends on December 31 . Information to be used for the operating budget this coming year follows. Sales and Merchandise Purchases Budget Information - Sales for this coming year ending December 31 are expected to be as follows: - Cost of goods sold is 40 percent of sales (this is the first line of the merchandise purchases budget). Merchandise irventory is maintained at a lavel equal to 20 percent of the next quarter's cost of goods sold. Marchandise inventory at the end of the fourth quarter budget period is estimatad to be $55,000. Selling and Adnwinistrative Budget Information - Management estimates all selling and administrative costs are fixed. - Quarterly selling and administrative cost estimatas for the coming year are Capital Expenditure and Cash Budget Information - The company plans to pay cash for property, plant, and equipment totaling $35,000 at the end of the fourth quarter. This purchasa will not affect depreciation expense for the coming year. - The company expects to collect 70 parcent of sales in the quarter of sale and 30 percent the quarter following the sale, Accounts receivable at the end of last year totaled $200,000, all of which will be collacted during the first quarter of this coming year. - All inventory purchases are on credit. The company expects to pay 80 percent of inventory purchases in the quarter of purchase and 20 percent the following quarter. Accounts payable at the end of last year totaled $68,000, all of which will be paid during the first quarter of this coming year. - The cash balance at the beginning of this coming year is expected to be $90,000. Budgeted Balance Sheet Information - Assume 30 percent of fourth quarter budgeted sales will be collected in full the following year (this represents accounts receivable at the end of the fourth quarter). - Expected account balances at the end of the fourth quarter are Property, plant, and equipment (net) $120,000 - Actual retained earnings at the end of the last year totaled $252,000, and no cash dividends will be paid during the current budget period ending December 31

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