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The following trial balance was drawn from the records of Havel Company as of October 1, year 2.

Cash	$	16,000
Accounts receivable		60,000
Inventory		40,000
Store equipment		200,000
Accumulated depreciation					$	76,800
Accounts payable						72,000
Line of credit loan						100,000
Common stock						50,000
Retained earnings						17,200
Totals	$	316,000			$	316,000

Required

1. a-1. Based on the following information, prepare a sales budget and a schedule of cash receipts for October, November, and December. Sales for October are expected to be $180,000, consisting of $40,000 in cash and $140,000 on credit. The company expects sales to increase at the rate of 10 percent per month. All accounts receivable are collected in the month following the sale.

2. a-2. Based on the following information, prepare a purchases budget and a schedule of cash payments for inventory purchases for October, November, and December. The inventory balance as of October 1 was $40,000. Cost of goods sold for October is expected to be $72,000. Cost of goods sold is expected to increase by 10 percent per month. The company expects to maintain a minimum ending inventory equal to 20 percent of the current month cost of goods sold. Seventy-five percent of accounts payable is paid in the month that the purchase occurs; the remaining 25 percent is paid in the following month.

3. a-3. Based on the following selling and administrative expenses budgeted for October, prepare a selling and administrative expenses budget for October, November, and December.

Sales commissions (10% increase per month)	$	7,200
Supplies expense (10% increase per month)		1,800
Utilities (fixed)		2,200
Depreciation on store equipment (fixed)		1,600
Salary expense (fixed)		34,000
Rent (fixed)		6,000
Miscellaneous (fixed)		1,000

Cash payments for sales commissions and utilities are made in the month following the one in which the expense is incurred. Supplies and other operating expenses are paid in cash in the month in which they are incurred.

Req A1 Req A2 Req A3 Based on the following information, prepare a purchases budget and a schedule of cash payments for inventory purchases for October, November, and December. The inventory balance as of October 1 was $40,000. Cost of goods sold for October is expected to be $72,000. Cost of goods sold is expected to increase by 10 percent per month. The company expects to maintain a minimum ending inventory equal to 20 percent of the current month cost of goods sold. Seventy-five percent of accounts payable is paid in the month that the purchase occurs; the remaining 25 percent is paid in the following month. Show less A Inventory Purchases Budget October November December Inventory needed 0 0 0 $ 0 $ 0 0 Required purchases (on account) Schedule of Cash Payments Payment of current months' accounts payable Payment for prior month's accounts payable Total budgeted payments for inventory $ 0 $ 0 $ 0 Req A1 Reg A2 Req A3 Based on the following selling and administrative expenses budgeted for October, prepare a selling and administrative expenses budget for October, November, and December. October November December Sales commissions $ 7,200 Supplies expense Utilities Depreciation on store equipment Salary expense 1,800 2,200 1,600 34,000 6,000 1,000 53,800 Rent Miscellaneous Total S&A expenses $