Chapter 7 Problem 23-A From Managerial Accounting Textbook

a. Prepare a sales budget P7-23A Oct. Nov. Dec. Pro Forma Data Cash sales Sales on account Total budgeted sales b. Prepare a schedule of cash receipts Oct. Nov. Dec. Pro Forma Data Current cash sales Plus collections from A/R Total collections c. Prepare an inventory purchases budget Oct. Nov. Dec. Pro Forma Data Budgeted cost of goods sold Plus: Desired ending inventory Inventory needed Less: Beginning inventory Required purchases (on account) d. Prepare a cash payments budget for inventory purchases Oct. Nov. Dec. Pro Forma Data Pmt. of current month's accts. pay. Pmt. for prior month's accts. pay. Total budgeted pmts. for inventory e. Prepare a selling and administrative expense budget Oct. Nov. Dec. Pro Forma Data Salary expense Sales commissions, 5% of sales Supplies expense, 2% of sales Utilities Depreciation on store fixtures Rent Miscellaneous Total S&A expenses f. Prepare a cash payment budget for selling and administrative expenses Oct. Nov. Dec. Pro Forma Data Salary expense Prior month's sales comm., 100% Supplies expense Prior month's utilities, 100% Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses g. Prepare a cash budget Oct. Nov. Dec. Pro Forma Data Beginning cash balance Add cash receipts Cash available (w) Less payments For inventory purchases For S&A expenses Purchase of store fixtures Interest expense* Total budgeted payments (x) Payments minus receipts Surplus (shortage) (w x) Financing activity Borrowing (repayment) (y) Ending cash balance (w x+ y) h. Prepare a pro forma income statement for the quarter Sales revenue Cost of goods sold Gross margin S&A expenses Operating income Interest expense Net income i. Prepare a pro forma balance sheet at the end of the quarter Assets Cash Accounts receivable Inventory Store fixtures Accumulated depreciation Book value of fixtures Total assets Liabilities Accounts payable Utilities payable Sales commissions payable Line of credit liability Equity Retained earnings Total liabilities and equity j. Prepare a pro forma statement of cash flows for the quarter Cash flows from operating activities Cash receipts from customers Cash payments for inventory Cash payments for S&A expenses Cash payments for interest expense Net cash flows from operating activities Cash flows from investing activities Cash payment for store fixtures Cash flow from financing activities Net Inflow from line of credit Net increase in cash Plus: Beginning cash balance Ending cash balance