Required information [The following information applies to the questions displayed below.) Zachary Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. 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 a. October sales are estimated to be $300,000, 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 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $13,800. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow: Required A Required B Required C. Required D Required E Required F Required G October sales are estimated to be $300,000, 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 120,000 180,000/ 300,000 144,000 216,000 360,000 172,800 259,200 432,000 $ $ $ Required A Required B Required C 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 AIR Total collections 120,000 op 120,000 144,000 180,000 324,000 172,800 216,000| 388,800 $ $ $ 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 month's cost of goods sold. However, ending inventory of December is expected to be $13,800. 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 Less: Beginning inventory Required purchases (on account) 180,000 21,600 201,600 op 201,600 216,000 25,920 241,920 21,600 220,320 259,200 13,800 273,000 25,920 247,080 $ $ $ The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.) November December October Schedule of Cash Payments Budget for Inventory Purchases Payment of current month's accounts payable $ 141,120 Payment for prior month's accounts payable of Total budgeted payments for inventory | $ 141,120 $ $ 154,224 60,480 | 214,704 172,956 66,096| 239,052 $ $ Prepare a selling and administrative expenses budget. November December $ $ October Selling and Administrative Expense Budget Salary expense $ 19,800 Sales commissions 12,000 Supplies expense 6,000 Utilities 3,200 Depreciation on store fixtures 5,800 Rent 6,600 Miscellaneous 3,000 Total S&A expenses $ 56,400 19,800 14,400 7,200 3,200 5,8001 6,600 3,000 60,000 19,800 17,280 8,640 3,200 5,800 6,600 3,000 64,320 $ $ 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. November December $ $ October Schedule of Cash Payments for S&A Expenses Salary expense $ 19,800 Sales commissions Supplies expense 6,000 Utilities Depreciation on store fixtures 0 Rent 6,600 Miscellaneous 3,000 Total payments for S&A expenses $ 35,400 19,800 12,000 7,200 3,200 19,800 14,400 8,640 3,200 0 6,600 3,000 51,800 $ 2000 6,600 3,000 55,640 $ e. Budgeted selling and administrative expenses per month follow: Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed) * Rent (fixed) Miscellaneous (fixed) $19,800 4 % of Sales 2% of Sales $ 3,200 $ 5,800 $ 6,600 $ 3,000 *The capital expenditures budget indicates that Zachary will spend $246,800 on October 1 for store fixtures, which are expected to have a $38,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. f. 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. Zachary 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $30,000 cash cushion. Prepare a cash budget. 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 Zachary 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 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $30,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.) Show less Cash Budget October November December Beginning cash balance Add: Cash receipts Cash available 120,000 120,000 324,000 324,000 388,800 388,800 Less: Payments Interest expense For inventory purchases For selling and administrative expenses Purchase of store fixtures 0 0 000 0 0 c 0 Total budgeted payments Payments minus receipts Surplus (shortage) Financing activity Borrowing (repayment) 120,000 324,000 388,800 $ 120,000 $ 324,000 $ 388,800 h. Prepare a pro forma income statement for the quarter. i. 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 I Required ] Prepare a pro forma income statement for the quarter. ZACHARY COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019