In preparing the budget for the first and second quarter of 2021, the following information were gathered:
Question:
In preparing the budget for the first and second quarter of 2021, the following information were gathered: Express Inc. Balance Sheet As of December 31, 2020 ASSETS LIABILITIES AND EQUITIES Cash 45,000 Accounts Payable 120,000 Accounts Receivable 120,000 Income Tax Payable 8,000 Allowance for D/A (4,570) Accrued Salaries 15,000 Mdse. inventory 180,000 Fixed Assets 180,000 Common Stock 200,000 Acc. Depn. (21,000) Retained Earnings 156,430 Total Assets 499,430 Total Liabilities and Capital 499,430 2020 3rd qtr actual 137,500 2020 4th qtr actual 140,000 2021 1st qtr estimated 160,000 2021 2nd qtr estimated 180,000 2021 3rd qtr estimated 200,000 Additional information follows: 1. Per unit selling price is P25 Historical data shows that 50% of sales will be collected during the quarter of sales, 30% of sales will be collected in the following quarter, 20% of sales will be collected in the 2nd quarter following the quarter of sales. 2. Gross profit from sales averages 35% of sales 3. Company's policy is to purchase an inventory each quarter in the amount equal to 120% of last quarter’s cost of goods sold. Payments for the purchases are: 50% in the quarter of purchase and 50% in the quarter following the quarter of purchase. 4. Selling and administrative expenses for each quarter are estimated at 5% of sales including the depreciation of fixed assets amounting to P4,300 every quarter. They are paid as incurred. 5. Accrued salaries were paid in January 5, 2021. 6. Income tax is 40% of the taxable income. The income tax liability in the balance sheet as of December 31, 2020 is to be paid during the first quarter of 2021. 7. Issued a 3-year, 10% semi-annual serial bonds on January 1, 2021, P150,000. Interest and an equal six (6) principal payments are required every June 30 and December 31. 8. The company declared and paid on June 30, 2021 dividends amounting to 40% of the net income after tax as of June 30, 2021.
Required:
1. Prepare a cash budget for the first and second quarter of 2021.
2. Prepare a pro-forma income statement for the first and second quarter of 2021. 3. Prepare a pro-forma balance sheet as of June 30, 2021.
Expert Answer:
Answer is given in attached file Workings for Answer 1 Collection Schedule Sales Budget Collected in ... View the full answer
