ual dnel RINCE SULTAN College of Business Administration Accounting Department ACC431 Advanced Managerial Accounting In class exercises Game Depot is a retail store selling video games. Sales are uniform for most of the year but repairs game systems. The forecast of sales and service revenue for the March-June 2014 is Sales and Service Revenues Budget March-June 2014 pick up in June and December both because purchase games in anticipation of summer or winter holidays. Game D new releases come out and because consumers epot also sells and as follows: Total Revenue $ 10,500 13,000 15,200 24,600 Expected Sales RevenueExpected Service Revenue Month March April May June $ 9,000 11,000 12,400 19,400 $1,500 2,000 2,800 5,200 Almost all the service revenue is paid for by bank credit card, so Game Depot budgets this as 100% bank card revenue. The bank cards charge an average fee of 3% of the total. Halfof the sales revenue is also paid for by bank credit card, for which the fee is also 3% on average. About 10% of the sales are paid in cash, and the rest (the remaining 40%) are carried on a store account. Although the store tries to give store credit only to the best customers, it still averages about 290 for uncollectible accounts; 90% of store accounts are paid in the month following the purchase, and 890 are paid 2 months after purchase. Required: 1. Calculate the cash that Game Depot expects to collect in May and in June 2014. Show 2. Game Depot has budgeted expenditures for May of $8,700 for the purchase of games and a. Given your answer to requirement 1, will Game Depot be able to cover its payments calculations for each month. game systems, $2,800 for rent and utilities and other costs, and $2,000 in wages for thet two part-time employees. for May? b. The projections for May are a budget. Assume (independently for each situation) that May revenues might also be 5% less and 10% less and that costs might be 8% higher Under each of those three scenarios, show the total net cash for May and the amount Game Depot would have to borrow if cash receipts are less than cash payments. Assume the beginning cash balance for May is $200. 3. Why do Game Depot's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Has preparing the cash budget been helpful? Explain briefly Suppose the costs for May are as described in requirement 2, but the expected ceipts for May are S12,400 and beginning cash balance is S200. Game Depot has the portunity to purchase the games and game systems on account in May, but the supplie offers the company credit terms of 2/10 net 30, which means if Game Depot pays within days.in May) it will.ieta2% di unt on the pr e Depot ice of the merchandise. Gan at| r 24%. Should Game Depot take the purchase discount