Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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. Required a. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. b. 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. c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow. Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed)* Rent (fixed) Miscellaneous (fixed) $18,000 5% of Sales 2% of Sales $1,400 $4,000 $ 4,800 $ 1,200 *The capital expenditures budget indicates that Adams will spend $164,000 on October 1 for store fixtures, which are expected to have a $20,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. f. 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. Prepare a cash payments budget for selling and administrative expenses. g. Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget. h. Prepare a pro forma income statement for the quarter. i. Prepare a pro forma balance sheet at the end of the quarter. j. Prepare a pro forma statement of cash flows for the quarter. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. December Sales Budget Cash sales Sales on account Total budgeted sales October November Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J 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. Schedule of Cash Receipts Current cash sales Plus collections from A/R Total collections October November December Required A Required B Required C Inventory Purchases Budget The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. October Inventory needed Required D Required E Required F Required G Required H Required purchases (on account) November Required I Required J December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.) October Schedule of Cash Payments Budget for Inventory Purchases Payment of current month's accounts payable Payment for prior month's accounts payable Total budgeted payments for inventory November December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a selling and administrative expenses budget. October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses November December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J 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. Prepare a cash payments budget for selling and administrative expenses. Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses October November December Required A Required B Required C Required D Required E Required F| Required G Required H Required I Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget. (Any repayments should be indicated with a minus sign.) Section 1: Cash Receipts Total cash available Section 2: Cash Payments Total budgeted disbursements Section 3: Financing Activities Cash Budget October November December Required J Show less Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma income statement for the quarter. ADAMS COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 < Required G Required I > Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) ADAMS COMPANY Pro Forma Balance Sheet December 31, Year 1 Assets Total assets Liabilities Equity Total liabilities and equity Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma statement of cash flows for the quarter. (Cash outflows should be indicated with a minus sign.) ADAMS COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flows from operating activities Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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. Required a. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. b. 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. c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. e. Budgeted selling and administrative expenses per month follow. Salary expense (fixed) Sales commissions Supplies expense Utilities (fixed) Depreciation on store fixtures (fixed)* Rent (fixed) Miscellaneous (fixed) $18,000 5% of Sales 2% of Sales $1,400 $4,000 $ 4,800 $ 1,200 *The capital expenditures budget indicates that Adams will spend $164,000 on October 1 for store fixtures, which are expected to have a $20,000 salvage value and a three-year (36-month) useful life. Use this information to prepare a selling and administrative expenses budget. f. 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. Prepare a cash payments budget for selling and administrative expenses. g. Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget. h. Prepare a pro forma income statement for the quarter. i. Prepare a pro forma balance sheet at the end of the quarter. j. Prepare a pro forma statement of cash flows for the quarter. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. December Sales Budget Cash sales Sales on account Total budgeted sales October November Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J 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. Schedule of Cash Receipts Current cash sales Plus collections from A/R Total collections October November December Required A Required B Required C Inventory Purchases Budget The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget. October Inventory needed Required D Required E Required F Required G Required H Required purchases (on account) November Required I Required J December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Prepare a cash payments budget for inventory purchases. (Round your final answers to the nearest whole dollar amounts.) October Schedule of Cash Payments Budget for Inventory Purchases Payment of current month's accounts payable Payment for prior month's accounts payable Total budgeted payments for inventory November December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a selling and administrative expenses budget. October Selling and Administrative Expense Budget Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses November December Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J 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. Prepare a cash payments budget for selling and administrative expenses. Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses October November December Required A Required B Required C Required D Required E Required F| Required G Required H Required I Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in any amount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget. (Any repayments should be indicated with a minus sign.) Section 1: Cash Receipts Total cash available Section 2: Cash Payments Total budgeted disbursements Section 3: Financing Activities Cash Budget October November December Required J Show less Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma income statement for the quarter. ADAMS COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 < Required G Required I > Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.) ADAMS COMPANY Pro Forma Balance Sheet December 31, Year 1 Assets Total assets Liabilities Equity Total liabilities and equity Required A Required B Required C Required D Required E Required F Required G Required H Required I Required J Prepare a pro forma statement of cash flows for the quarter. (Cash outflows should be indicated with a minus sign.) ADAMS COMPANY Pro Forma Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flows from operating activities Net cash flows from operating activities Cash flows from investing activities Cash flow from financing activities
Expert Answer:
Related Book For
Posted Date:
Students also viewed these human resource management questions
-
Vernon 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...
-
Preparing a master budget for retail company with no beginning account balances Patel Company is a retail company that specializes in selling outdoor camping equipment. The company is considering...
-
Use the DerivaGem software to value a five-year collar that guarantees that the maximum and minimum interest rates on a LIBOR-based loan (with quarterly resets) are 7% and 5% respectively. The LIBOR...
-
What are reasons that a person may have a poor net cash flow yet be considered to be in good financial health?
-
1. Write at least 10 Agile/user stories for Project 1 to include a detailed description, assumptions, assignee, story point estimation, priority, list of tasks and tests, and definition of done for...
-
The number of countries who played Womens Cricket World Cup from 1973 through 2013 (a) find the mean, variance, and standard deviation of the probability distribution, (b) interpret the results....
-
Financial information (in thousands of dollars) relating to three different companies follows. Instructions: 1. Compute the following ratios: (a) Return on sales (b) Asset turnover (c)...
-
An entrepreneur asks for $100,000 to purchase a diagnostic machine for a healthcare facility. The entrepreneur hopes to maintain as much equity in the company, yet the Angel Investor requires the...
-
b uild the worksheet provided with all the ledger information. Date Dec 31 Balance Jan 3 Jan Jan 3 6 Jan Jan low 9 1225 26 Jan 27 Jan Jan 31 Date Dec 31 Balance Jan 20 Date Dec 31 Balance Jan 3 Jan...
-
How is the Gini coefficient calculated and what does it show?
-
A circular loop of diameter \(150 \mathrm{~mm}\) is placed on a wooden table that makes angle of \(24.5^{\circ}\) with a uniform magnetic field. What must be the magnitude of the magnetic field if...
-
What are the limitations of using GDP as a measure of well-being for a country?
-
Explain the Lorenz curve and what it measures.
-
List the capital inputs necessary to produce each of the following: a. cars b. secondary education c. air travel d. fruit and vegetables.
-
A tablet containing 500.0 mg of aspirin (acetylsalicylic acid or HC 9 H 7 O 4 ) was dissolved in enough water to make 100 mL of solution. Given that K a = 3.0 10 4 for aspirin, what is the pH of the...
-
On April 29, 2015, Auk Corporation acquires 100% of the outstanding stock of Amazon Corporation (E & P of $750,000) for $1.2 million. Amazon has assets with a fair market value of $1.4 million (basis...
-
Who is the maker of a note payable?
-
Ellen Crawley owns a small restaurant in New York City. Ms. Crawley provided her accountant with the following summary information regarding expectations for the month of June. The balance in...
-
Ball Co. purchased inventory with a list price of $4,000 with the terms 2/10, n/30. What amount will be debited to the Merchandise Inventory account?
-
Eq. 7.36a is written for the conservation of momentum in y direction. Obtain Eq. 7.36-b wherein the stream function is independent variable. Eq. 7.36(a,b) y - v v +(1-y/R)v- + momentum: u u R-y + R P...
-
Using Maslen method, find the approximate value of pressure and density at the junction of the sphere and the cone of Problem 7.29 at Mach number 8. Problem 7.29 An empirical way to determine shock...
-
Show that the derivative of the boundary layer edge velocity is given by Eq. 7.64 for the figure given below. Eq. 7.64 M>>1 Ue dx R dy/dx = 1/R
Study smarter with the SolutionInn App