Sales are budgeted at $320,000 for November, $340,000 for December, and $330,000 for January. Collections are expected to be 75% in the month of sale, 20% in the month following the sale, and 5% uncollectible. The cost of goods sold is 65% of sales. The company desires ending merchandise inventory to equal 80% of the following month's cost of goods sold. Payment for merchandise is made in the month following the purchase. Other monthly expenses to be paid in cash are $21,000. Monthly depreciation is $16,000. Ignore taxes.

The Schedule of Expected Cash Collections for November and December.

The Merchandise

Purchases Budget for November and December.

The Cash Budget for November & December

1. Prepare Budgeted Income Statements for November and December.

2. Prepare a Budgeted Balance Sheet for the end of December.

Statement of Financial Position October 31 Assets Cash... Accounts receivable (net of allowance for uncollectible accounts). Merchandise inventory.. Property, plant and equipment (net of $658,000 accumulated depreciation). Total assets. $22,000 82,000 166,400 1,170,000 $1,440,400 Liabilities and Stockholders' Equity Accounts payable Common stock... Retained earnings... Total liabilities and stockholders' equity. $199,000 840,000 401,400 $1,440,400 November December $320,000 $340,000 Sales. The Schedule of Expected Cash Collections Accounts receivable. November sales. December sales Total cash collections. $82,000 240,000 $64,000 255,000 $319,000 $322,000 b. Budgeted cost of goods sold. Add desired ending merchandising inventory... Total needs Less beginning merchandise inventory. Required purchases.... November $208,000 176,800 384,800 166,400 $218,400 December $221,000 171,600 392,600 176,800 $215,800 The Cash Budget for November & December Cash disbursements for merchandise Other monthly cash expenses.......... Total cash disbursements. November $199,000 21,000 $220,000 December $218,400 21,000 $239,400 Cash balance, beginning. Add cash receipts. Total cash available.. Less cash disbursements: Excess (deficiency) of cash available over disbursements Financing... Cash balance, ending.. $22,000 322,000 344,000 220,000 124,000 0 $124,000 $124,000 319,000 443,000 239,400 203,600 0 $203,600