Question

Baird 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 $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 70 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $12,100. 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:

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.

	BAIRD COMPANY Pro Forma Income Statement For the Quarter Ended December 31, 2019

    

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

	BAIRD COMPANY Pro Forma Balance Sheet December 31, 2019 Assets Total assets Liabilities

   

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

	BAIRD 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 Cash flows from investing activities Cash flow from financing activities

                                                    

Answer 1

Sales Budget
	October	November	December
Sales	$      300,000.00	$ 360,000.00	$       432,000.00
Cash Sales	$      120,000.00	$ 144,000.00	$       172,800.00
Credit Sales	$      180,000.00	$ 216,000.00	$       259,200.00

Schedule of Cash Receipts
	October	November	December	Receivable at the end of December
Cash Sales	$      120,000.00	$ 144,000.00	$       172,800.00
Cash Received Against Previous Month Credit Sales	$                        -	$ 180,000.00	$       216,000.00
Total Cash Receipts	$      120,000.00	$ 324,000.00	$       388,800.00	$                   259,200.00
Inventory Purchases Budget
	October	November	December
Opening Inventory	$                        -	$    50,400.00	$         60,480.00
Inventory Sold	$      260,400.00	$ 262,080.00	$       254,020.00
Closing Inventory Needed	$        50,400.00	$    60,480.00	$         12,100.00
Purchases	$      310,800.00	$ 272,160.00	$       205,640.00
Cost of Goods Sold	$      210,000.00	$ 252,000.00	$       302,400.00
Cash Payment Budget
	October	November	December	Payable In december
Purchases	$      310,800.00	$ 272,160.00	$       205,640.00
Payment of 80% in same Month	$      279,720.00	$ 244,944.00	$       185,076.00
Payment Of 20% in Next Month	$                        -	$    31,080.00	$         27,216.00	$                     20,564.00
Total Cash Paid	$      279,720.00	$ 276,024.00	$       212,292.00
Baird Company
Proforma Income Statement For Quarter Ended December
Revenue	$ 1,092,000.00
Less-Purchases	$      788,600.00
Add-Closing Stock	$        12,100.00
Gross Profit	$      315,500.00
Baird Company
Proforma Balance Sheet For Quarter Ended December
Assets
Accounts Receivable	$      259,200.00
Cash	$        64,764.00
Closing Stock	$        12,100.00
Total Assets	$      336,064.00
Liabilities
Accounts Payables	$        20,564.00
Shareholder's Funds	$      315,500.00
Total Liabilities	$      336,064.00
Baird Company
Proforma Statement of cash flow
for the Quarter ended December 31st
Cash from Operating Activities
Inflow from revenue			$       315,500.00
Outflow for Administrative expenses			$                        -
Increase in Value of Inventory			$       (12,100.00)
Icrease In Accounts Receivables			$    (259,200.00)
Icrease In Accounts Payable			$         20,564.00
(A)Net Inflow from Operating Activities			$         64,764.00
Cash flow from Investing Activities
(B)Net Inflow from Investing Activities			$                        -
Cash Flow from Financing Activities
Proceeds by issue of Common Stock			$                        -
(C )Net Inflow from Financing Activities			$                        -
(A+B+C) Cash Generated During Year			$         64,764.00
Beginning cash Balance			$                        -
Closing cash balance			$         64,764.00