The following information is for the Heart's Delight Gift Store: Sales: Each unit sells for $5....
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The following information is for the Heart's Delight Gift Store: Sales: Each unit sells for $5. Sales are 75% cash and 25% credit. 50% of the credit sales are collected in the month of sale and the remainder in the following month. The gross profit % is 30%. Recent and budgeted sales are: September October November December January $30,000 40,000 48,000 64,000 80,000 Operating expenses for the quarter are given below: October $ 10,000 3,000 1,000 1,600 $15,600 November $ 10,200 December $ 12,000 3,000 Salaries Rent 3,000 Depreciation Other 1,000 1,920 $16.120 1,150 2,400 $18,550 Total Purchases: Heart's Delight desires an ending inventory of 40% of the next month's cost of goods sold but the ending inventory should never be less than $20,000. 60% of the month's purchases are paid for in the month of purchase and the remainder in the following month. . Heart's Delight is planning on purchasing additional store fixtures in November at a cost of $7,000 cash. This is a purchase of equipment, not inventory. Financing: Heart's Delight must maintain a minimum cash balance of $8,000. All borrowing is to be done at the beginning of the month and all repayments are made at the end of the month in $1,000 increments. Loans are repaid when sufficient cash is available. Interest is paid only at the time of repaying principal. The interest rate is 18% per year. Management does not want to borrow any more cash than is necessary and wants to repay as soon as cash is available. Oldest loans are repaid first. Required: Fill in the following schedules. Check figures have been provided. Additional information can be found on the 3rd quarter balance sheet at the end of the problem. Budgeted Cash Receipts( cash collections Oct., $38,750, Qtr., $147,750) Accounts December Quarter Receivable October November Budgeted Inventory Purchases(budgeted purchases Oct., $24,400; Qtr, $105,200) October November December Total Budgeted Payments for Purchases( payments, Oct., $29,640; Qtr., $101,320; Accts. Pay, qtr., $18,880) Accounts October November December Total Payable Cash Budget(Ending balance, Oct., $8,510; total cash disbursements nov., $52,040; ending cash Qtr, $8,190) October November December Quarter Comparative Income Statement (Use information from previous budgets to complete) Sales Sales budget COGS Units sold x cost per unit Gross profit Selling and Administrative Expenses Selling and Administrative expense budget Operating income Interest Expense Cash budget Income before taxes Income tax expense (25%) Net income $(4.790) Comparative Budgeted Balance Sheet as of December 31 (Use information from previous budgets and income statement to complete) 3rd Quarter 4th Quarter Assets Cash $12,000 Cash budget Accounts Receivable 3,750 Cash collections budget Inventory 23,600 Purchases budget Furniture and Equipment, net 40,000 Beginning balance + equip purchase- Depr exp Total assets $79,350 $82,440 Liabilities and Stockholders' Equity Accounts Payable $15,000 Cash payments budget Cash budget Notes Payable 40,000 40,000 Common Stock 24,350 Beg RE + Net income - dividends Retained Earnings Total liabilities and stockholders' equity $79.350 $82.500 The following information is for the Heart's Delight Gift Store: Sales: Each unit sells for $5. Sales are 75% cash and 25% credit. 50% of the credit sales are collected in the month of sale and the remainder in the following month. The gross profit % is 30%. Recent and budgeted sales are: September October November December January $30,000 40,000 48,000 64,000 80,000 Operating expenses for the quarter are given below: October $ 10,000 3,000 1,000 1,600 $15,600 November $ 10,200 December $ 12,000 3,000 Salaries Rent 3,000 Depreciation Other 1,000 1,920 $16.120 1,150 2,400 $18,550 Total Purchases: Heart's Delight desires an ending inventory of 40% of the next month's cost of goods sold but the ending inventory should never be less than $20,000. 60% of the month's purchases are paid for in the month of purchase and the remainder in the following month. . Heart's Delight is planning on purchasing additional store fixtures in November at a cost of $7,000 cash. This is a purchase of equipment, not inventory. Financing: Heart's Delight must maintain a minimum cash balance of $8,000. All borrowing is to be done at the beginning of the month and all repayments are made at the end of the month in $1,000 increments. Loans are repaid when sufficient cash is available. Interest is paid only at the time of repaying principal. The interest rate is 18% per year. Management does not want to borrow any more cash than is necessary and wants to repay as soon as cash is available. Oldest loans are repaid first. Required: Fill in the following schedules. Check figures have been provided. Additional information can be found on the 3rd quarter balance sheet at the end of the problem. Budgeted Cash Receipts( cash collections Oct., $38,750, Qtr., $147,750) Accounts December Quarter Receivable October November Budgeted Inventory Purchases(budgeted purchases Oct., $24,400; Qtr, $105,200) October November December Total Budgeted Payments for Purchases( payments, Oct., $29,640; Qtr., $101,320; Accts. Pay, qtr., $18,880) Accounts October November December Total Payable Cash Budget(Ending balance, Oct., $8,510; total cash disbursements nov., $52,040; ending cash Qtr, $8,190) October November December Quarter Comparative Income Statement (Use information from previous budgets to complete) Sales Sales budget COGS Units sold x cost per unit Gross profit Selling and Administrative Expenses Selling and Administrative expense budget Operating income Interest Expense Cash budget Income before taxes Income tax expense (25%) Net income $(4.790) Comparative Budgeted Balance Sheet as of December 31 (Use information from previous budgets and income statement to complete) 3rd Quarter 4th Quarter Assets Cash $12,000 Cash budget Accounts Receivable 3,750 Cash collections budget Inventory 23,600 Purchases budget Furniture and Equipment, net 40,000 Beginning balance + equip purchase- Depr exp Total assets $79,350 $82,440 Liabilities and Stockholders' Equity Accounts Payable $15,000 Cash payments budget Cash budget Notes Payable 40,000 40,000 Common Stock 24,350 Beg RE + Net income - dividends Retained Earnings Total liabilities and stockholders' equity $79.350 $82.500
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Hearts Delight Gift Store Calculation Budgeted cash receipts Req 1 October November December Quarter ... View the full answer
Related Book For
Financial and Managerial Accounting
ISBN: 978-0538480895
11th Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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