Use your excel spreadsheet , completed as part of Question 1, to complete the following budgets for Bountiful Company.

Budget h. Income statement for the quarter ended December 21, Year1.

Budget i. Balance sheet as of December 31, Year1.

Note:

This is one large problem so for full credit all answer boxes must be correct at the same time. If you choose Resubmit from the bottom of the page, you will only need to input the numbers you want to change. Submit or resubmit until they are all correct.

----

Bountiful is a retail company that sells specialized gardening products. The company is considering opening a new store on October 1, Year1. As budget coordinator, you have been asked to prepare a master budget for the first 3 months of the companys operation. You have gathered the following information:

October sales are estimated to be $400000 of which 35 percent will be cash and the remainder will be on credit. The company expects all sales to increase at the rate of 10 percent per month for November and December. Sales in January Year 2 are expected to be $300000.

The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale.

Prepare a sales budget and a schedule of cash receipts using these facts and your excel template. Check your answers here before moving to the next part, by completing the cells requested in the chart below.

a. Sales Budget	October	November	December	Total-Qtr
Cash sales		154000		463400
Sales on account			314600
Total budgeted sales	400000			1324000

b. Schedule of Cash Receipts	October	November	December	Total-Qtr
Current cash sales
Plus collections from A/R		260000
Total collections	140000			1009400

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. (Ending inventory for December is based on budgeted January Year2 sales.)

Assume that all inventory purchases are made on account (on credit). The company pays 60 percent of accounts payable in the month of purchase and the remaining amount in the following month.

In excel, prepare an inventory purchases budget and a cash payments budget for inventory purchases. Use the check figures below before you continue.

c. Inventory Purchases Budget	October	November	December	Total-Qtr
Budgeted cost of goods sold			338800
Plus desired ending inventory		67760
Inventory needed
Less beginning inventory		61600
Required purchases (on account)

d. Cash payments for inventory	October	November	December	Total-Qtr
Payment of current month's A/P		171600
Payment for prior month's A/P
Total budgeted payments

Budgeted selling and administrative expenses per month follow.

Salary expense (fixed): $ 32800

Sales commissions: 4 percent of Sales

Supplies expense: 3 percent of Sales

Utilities (fixed): $1700

Depreciation on store equipment (fixed)*: You compute

Rent (fixed) $ 15000

Miscellaneous (fixed): $ 800

*The capital expenditures budget indicates that the company will spend $350000 on October 1 for store fixtures, which are expected to have a $20000 residual value and a 60 month useful life.

Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred.

In excel, prepare the selling and administrative expenses budget and the cash payments budget for selling and administrative expenses. Check the key figures below.

e. Selling and Admin.Expense Budget	October	November	December	Total-Qtr
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total S&A expenses

f. Cash payments for S&A	October	November	December	Total-Qtr
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total payments for S&A expenses

Bountiful issued stock for 250000 on October 5. A dividend of $80000 was paid on December 15.

The company borrows and repays funds in increments of $1,000 on the last day of the month. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $23000 cash cushion.

Prepare a cash budget on your excel template. Check key figure below.

g. Cash Budget	October	November	December	Total-Qtr
Beginning cash balance
Issuance of stock
Collections from customers
Cash available
Less payments
For inventory purchases
For S&A expenses
Purchase of store fixtures
Pay dividend
Interest expense
Total budgeted payments
Cash balance before borrow/repay
Financing activity
Borrowing (repayment)
Ending cash balance