Required: Using the data above 1. Complete the foilowing schedule Credit sales Total colections 24,B00 Following is selected information relating to the operations of Pocketchange Company, a tie distributor September 30,2018- Trial Balance information 2 Complete the following Oct 49.5000 Dec receivable 24.800 600 Add: Desired ending inventory nvent Total needs Less: Beginning inventory Required purchases ble 30,600 apital stock Retained eanin 150,000 Oct. Sales X 75% cost ratio ++ Nov Sales x 75% oost ratio x 80% Schedule of Expected Cash Disbursement urchu a. Actual and budgeted sales data: Oct Dec. 28,950 28,950 57,900 S 62 October November 66,000 80,000 94,000 48,000 Dec, purchases Total disbursements for purchases 3. Complete the following Schedule of Expected Cash Disbursements-Operating Expenses b. Gross profit is 25% of sales (or 75% Cost of Goods Sold %) Dec and wages Sales are 60% for cash and 40% on credit. sale. Credit sales are collected in the month following The accounts receivable at September 30 are a result of the September's credit sales 2,500 3,960 C. Other expenses Total disbursements. At the end of each month, inventory on hand is to be equal to 80% of the following month's sales needs, stated at cost. d. 4 Complete the following cash budget Cash Budget (Cash Recelpts and Disbursements) One-half of a month's inventory purchases is paid in the month of purchase; the other half is paid in the following month. The accounts payable at September 30 are a result of September purchases of inventory Oet Dec e. 64,400 72.900 Add: cash collections... Total cash available Monthly expenses are as follows: salaries and wages, 12% of sales; rent, $2,500 per month, other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $1,300 per month (includes depreciation on new assets) Less: Cash disbursements. 53,000 14,380 7,000 For inventory For expenses.... For equipment.. Total cash disbursements Equipment costing $7,000 will be purchased for cash in the October $3,000 in November, and another $2,000 in December Expected cash balance (overdraft). 7,000 The company must maintain a minimum cash balance of $5,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month; borrowing and repayments must be made in multiples of $1,000. The annual interest rate is 12%. Interest is paid only at the time of repayment of priciples: figure interest on the whole month (2/12, 3/12, and so forth). Any unpaid interest is accrued at the end of the quarter Repayments (at end) Interest (at 12% per year. Cash balance, ending 5. Prepare an income statement for the quarter ended December 31. (Use the functional format in Total financing $ 5,520 preparing your income statement, as shown in the text.) 6. Prepare a balance sheet as of December 31
