Zachary 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:

Problem 14-23 Part 1

Required

October sales are estimated to be $300,000, of which 40 percent will be cash and 60 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 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next months cost of goods sold. However, ending inventory of December is expected to be $13,800. Assume that all purchases are made on account. Prepare an inventory purchases budget.

The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases.

Budgeted selling and administrative expenses per month follow:

Salary expense (fixed)	$	19,800
Sales commissions		4	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	3,200
Depreciation on store fixtures (fixed)*	$	5,800
Rent (fixed)	$	6,600
Miscellaneous (fixed)	$	3,000

*The capital expenditures budget indicates that Zachary will spend $246,800 on October 1 for store fixtures, which are expected to have a $38,000 salvage value and a three-year (36-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

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. Prepare a cash payments budget for selling and administrative expenses.

Zachary borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. 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 $30,000 cash cushion. Prepare a cash budget.

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October sales are estimated to be $300,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.

	October	November	December
Sales Budget
Cash sales
Sales on account
Total budgeted sales	$0	$0	$0

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.

	October	November	December
Schedule of Cash Receipts
Current cash sales
Plus collections from A/R
Total collections	$0	$0	$0

The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next months cost of goods sold. However, ending inventory of December is expected to be $13,800. Assume that all purchases are made on account. Prepare an inventory purchases budget.

	October	November	December
Inventory Purchases Budget
Inventory needed	0	0	0
Required purchases (on account)	$0	$0	$0

The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.)

	October	November	December
Schedule of Cash Payments Budget for Inventory Purchases
Payment of current month's accounts payable
Payment for prior month's accounts payable
Total budgeted payments for inventory	$0	$0	$0

Prepare a selling and administrative expenses budget.

	October	November	December
Selling and Administrative Expense Budget
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total S&A expenses	$0	$0	$0

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. Prepare a cash payments budget for selling and administrative expenses.

	October	November	December
Schedule of Cash Payments for S&A Expenses
Salary expense
Sales commissions
Supplies expense
Utilities
Depreciation on store fixtures
Rent
Miscellaneous
Total payments for S&A expenses	$0	$0	$0

Zachary borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. 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 $30,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.)

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Cash Budget
	October	November	December
Cash available	0	0	0
Less: Payments
Total budgeted payments	0	0	0
Payments minus receipts
	0	0	0
Financing activity
	$0	$0	$0

Zachary 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:

Problem 14-23 Part 2

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 income statement for the quarter.

ZACHARY COMPANY
Pro Forma Income Statement
For the Quarter Ended December 31, 2019
	0
	0
	$0

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

ZACHARY COMPANY
Pro Forma Balance Sheet
December 31, 2019
Assets
		0
Total assets		$0
Liabilities
Equity
Total liabilities and equity		$0

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

ZACHARY COMPANY
Pro Forma Statement of Cash Flows
For the Quarter Ended December 31, 2019
Cash flows from operating activities
Net cash flows from operating activities		$0
Cash flows from investing activities
Cash flow from financing activities
		$0