Requirement 5. Prepare the cash collections budget for November and December Review the sales budget prepared in Requirement 1. Thrifty Dollar Cash Collections Budget For the Months of November and December November December Cash sales Credit sales net of fees Total cash collections Requirement 6. Prepare the cash payments budget for November and December if no cash paymen Prepare the following budgets for November and December 1. Sales budget 2. Cost of goods sold inventory, and purchases budget 3. Operating expense budget 4. Budgeted income statement 5. Cash collections budget 6. Cash payments budget 7. Combined cash budget me ireil Print Done Dollar and then continue to the next question . a . . . . October sales are projected to be $320,000 Sales are projected to increase by 20% in November and another 30% in December and then return to the October level in January 40% of sales are made in cash while the remaining 60% are paid by credit or debit cards. The credit card companies and banks (debit card issuers) charge a 5% transaction fee, and deposit the net amount (sales price less the transaction fee) in the store's bank account daily. The store does not accept checks. Because of the payment mechanisms, there is no risk of non-payment or bad-debts. The store's gross profit is 40% of its sales revenue. For the next several months, the store wants to maintain an ending merchandise inventory equal to $18,000 plus 15% of the next month's cost of goods sold. All purchases for merchandise are made on account and paid in the month following the purchase. The September 30 inventory is expected to be $46,800 Expected monthly operating expenses and details about payments include the following Wages of store workers should be $7,000 per month and are paid on the last day of each month Utilities expense is expected to be $600 per month in September October and November . . Print Done . For the next several months, the store wants to maintain an ending merchandise inventory equal to $18,000 plus 15% of the next month's cost of goods sold. All purchases for merchandise are made on account and paid in the month following the purchase. The September 30 inventory is expected to be $46,800 Expected monthly operating expenses and details about payments include the following Wages of store workers should be $7,000 per month and are paid on the last day of each month. Utilities expense is expected to be $600 per month in September October, and November Utilities expense is expected to be $1,200 per month during the colder months of December, January, and February. All utility bills are paid the month after incurred Property tax is $27.600 per year and is paid semiannually each December and June Property and liability insurance is $20,400 per year and is paid semiannually each January and July Depreciation expense is $156,000 per year, the straight-line method used. Transaction fees, as stated earlier are 5% of credit and debit card sales . . . . . . Print Done . . . Wages of store workers should be $7,000 per month and are paid on the last day of each month Utilities expense is expected to be $600 per month in September, October, and November Utilities expense is expected to be $1.200 per month during the colder months of December, January, and February All utility bills are paid the month after incurred. Property tax is $27.600 per year and is paid semiannually each December and June Property and liability insurance is $20,400 per year and is paid semiannually each January and July Depreciation expense is $156,000 per year the straight-line method used Transaction fees, as stated earlier, are 5% of credit and debit card sales Cash dividends of $220,000 are to be paid in December Assume the cash balance on October 31 is $45,000. The company wants to maintain a cash balance of at least $45.000 at the end of every month. The company has arranged a line of credit with a local bank at a 3% interest rate There is no outstanding debt as of October 31
