Question
Thornton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year
Thornton Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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 $400,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 30 percent per month. Salary expense (fixed) $ 19,500 Sales commissions 4 % of Sales Supplies expense 2 % of Sales Utilities (fixed) $ 2,900 Depreciation on store fixtures (fixed)* $ 5,500 Rent (fixed) $ 6,300 Miscellaneous (fixed) $ 2,700
Prepare a pro forma income statement for the quarter.
THORNTON COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Operating income Interest expense Net income
Prepare a pro forma balance sheet at the end of the quarter.
THORNTON COMPANY Pro Forma Balance Sheet December 31, Year 1 Assets Accounts receivable Inventory Cash Accumulated depreciation Store fixtures Book value of fixtures Total assets Liabilities Accounts payable Line of credit liability Utilities payable Sales commissions payable Equity Retained earnings Total liabilities and equity
Prepare a pro forma statement of cash flows for the quarter.
THORNTON COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flows from operating activities Cash payments for selling and administrative expenses Cash payments for interest expense Cash payments for inventory Cash receipts from customers Net cash flows from operating activities 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
thank you so much I appreciate the help
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