Budgeted Cash Collections, Net Income, Accounts Payable The January 31, 20X6, balance sheet of Shelpat Corporation follows:

Collections are expected to be \(60 \%\) in the month of sale, \(38 \%\) the next month, and \(2 \%\) uncollectible. The gross margin is \(25 \%\) of sales. Purchases each month are \(75 \%\) of the next month's projected sales. The purchases are paid in full the following month. Other expenses for each month, paid in cash, are expected to be \(\$ 16,500\). Depreciation each month is \(\$ 5,000\).
For February, 20X6, compute:

(a) budgeted cash collections,

(b) the pro forma income or loss before taxes,

(c) the projected ending balance of accounts payable.

Transcribed Image Text:

Cash.......... Accounts receivable (net of allowance for uncollectible accounts of $2,000) Inventory Property, plant and equipment (net of allowance for accumulated depreciation of $60,000). Accounts payable. Common stock.......... Retained earnings (deficit). Additional information: Sales are budgeted as follows: February.......... March 8,000 38,000 16,000 40.000 .$ 102,000 $ 82,500 50,000 (30,500) $ 102,000 .$ 110,000 ............$ 120,000