Solomon 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:

October sales are estimated to be $310,000, of which 45 percent will be cash and 55 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.

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.

The cost of goods sold is 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next months cost of goods sold. However, ending inventory of December is expected to be $13,300. Assume that all purchases are made on account. Prepare an inventory purchases budget.

The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases.

Budgeted selling and administrative expenses per month follow:

Salary expense (fixed)	$	19,300
Sales commissions		4	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	2,700
Depreciation on store fixtures (fixed)*	$	5,300
Rent (fixed)	$	6,100
Miscellaneous (fixed)	$	2,500

*The capital expenditures budget indicates that Solomon will spend $160,200 on October 1 for store fixtures, which are expected to have a $33,000 salvage value and a two-year (24-month) useful life.

Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.)

SOLOMON COMPANY
Pro Forma Balance Sheet
December 31, 2019
Assets
Cash
Accounts receivable
Inventory
Store fixtures
Less: Accumulated depreciation
Book value of fixtures		0
Total assets		$0
Liabilities
Accounts payable
Line of credit liability
Utilities payable
Sales commissions payable
		0
Equity
Retained earnings
		0
Total liabilities and equity		$0

Prepare a pro forma income statement for the quarter.

Prepare a pro forma balance sheet at the end of the quarter.

Prepare a pro forma statement of cash flows for the quarter.

Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.)

SOLOMON COMPANY
Pro Forma Statement of Cash Flows
For the Quarter Ended December 31, 2019
Cash flows from operating activities
Cash payments for inventory
Cash payments for selling and administrative expenses
Cash payments for interest expense
Cash receipts from customers
Net cash flows from operating activities		$0
Cash flows from investing activities
Cash payment for store fixtures
Cash flow from financing activities
Net inflow from line of credit
Net increase in cash
Plus: Beginning cash balance
Ending cash balance		$0