Question

October sales are estimated to be $280000 of which 60 percent will be cash and the remainder will be on credit. The company expects all sales to increase at the rate of 25 percent per month for November and December. Sales in January Year 2 are expected to be $250000. 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 Sales on account Total budgeted sales b. Schedule of Cash Receipts October November December Total-Qtr Current cash sales Plus collections from A/R Total collections The cost of goods sold is 80 percent of sales. The company desires to maintain a minimum ending inventory equal to 30 percent of the next month’s 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 20 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 Plus desired ending inventory Inventory needed Less beginning inventory Required purchases (on account) d. Cash payments for inventory October November December Total-Qtr Payment of current month's A/P Payment for prior month's A/P Total budgeted payments Budgeted selling and administrative expenses per month follow. Salary expense (fixed): $ 21500 Sales commissions: 3 percent of Sales Supplies expense: 1 percent of Sales Utilities (fixed): $2300 Depreciation on store equipment (fixed)*: You compute Rent (fixed) $ 8000 Miscellaneous (fixed): $ 1250 *The capital expenditures budget indicates that the company will spend $450000 on October 1 for store fixtures, which are expected to have a $48000 residual value and a 48 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

Answer 1

KINDLY UNDERSTAND THAT WE ARE REQUIRED TO ANSWER FOUR PARTS OF ONE QUESTION. AS SUCH, REQUEST YOU TO ASK BALANCE PARTS THROUGH A SEPARATE QUESTION.