Instructions and requirements - Problem ATC 14-2 page 535

1. Prepare a sales budget for Oct, Nov and Dec

2. Prepare a schedule of cash receipts for Oct, Nov and Dec

3. Prepare a schedule of purchases for Oct, Nov and Dec

4. Prepare a schedule of cash disbursements for the inventory for Oct, Nov and Dec

5 Prepare a SGA budget for Oct, Nov and Dec

6 Prepare a cash disbursements budget for the anticipated SGA expenses for Oct, Nov and Dec

7. Prepare an income statement for the three months ended Dec

8. Prepare a balance sheet as of Dec 31

9. Comment if you believe the company needs to borrow money at any point during the quarter

10. Comment if you think there are other schedules that should be prepared to assist in planning/controlling activities

Cash $16,000

Accounts receivable $60,000

Inventory $40,000

Store equipment $200,000

Accumulated depreciation $76,800

Accounts payable $72,000

line of credit loan $100,000

common stock $50,000

retained earnings $17,200

sales commission (10% increase per month) $7200

supplies expense (10% increase per month) 1800

utilities (fixed) 2,200

depreciation on store equipment (fixed) $1,600

salary expense (fixed) 34,000

rent (fixed) 6,000

miscellaneous (fixed) 1,000

INCOME STATEMENT

Sales revenue ?

costs of goods sold ?

gross margin $357,480

operating expenses ?

operating income 193,290

interest expense (2530)

net income $190,760

BALANCE SHEET

ASSETS

cash $9760

accounts receivable ?

inventory ?

store equipment $200,000

accumulated depreciation store equipment ?

book value of equipment 118,400

total assets 314,984

LIABILITIES

accounts payable ?

utilities payable ?

sales commission payable ?

line of credit $23,936

EQUITY

common stock 50,000

retained earnings ?

total liabilities & equity 314,984

sales commission earned in September $6545

Based on the following information, prepare a sales budget and a schedule of cash receipts for October, November, and December. Sales for October are expected to be $180,000, consisting of $40,000 in cash and $140,000 on credit. The company expects sales to increase at the rate of 10 percent per month. All accounts receivable are collected in the month following the sale. Based on the following information, prepare a purchases budget and a schedule of cash payments for inventory purchases for October, November, and December. The inventory balance as of October 1 was $40,000. Cost of goods sold for October is expected to be $72,000. Cost of goods sold is expected to increase by 10 percent per month. The company expects to maintain a minimum ending inventory equal to 20 percent of the current month cost of goods sold. Seventy-five percent of accounts payable is paid in the month that the purchase occurs; the remaining 25 percent is paid in the following month. Based on the following selling and administrative expenses budgeted for October, prepare a selling and administrative expenses budget for October, November, and December. Balance Sheet $ 9,760 $200,000 oment _ ? 118,400 $314,984 Assets Cash Accounts receivable Inventory Store equipment Accumulated depreciation store equipment Book value of equipment Total assets Liabilities Accounts payable Utilities payable Sales commissions payable Line of credit Equity Common stock Retained earnings Total liabilities and equity 23,936 50,000 $314,984 Income Statement $ ? 357,480 Sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense Net income 193,290 -(2,530) $190,760 Sales commissions (10% increase per month) S7,200 Supplies expense (10% increase per month) 1,800 Utilities (fixed) 2,200 Depreciation on store equipment (fixed) 1,600 Salary expense (fixed) 34,000 Rent (fixed) 6,000 Miscellaneous (fixed) 1,000 The following account balances were drawn from the records of Havel Company as of October 1, 2018. Cash $ 16,000 Accounts receivable 60,000 Inventory 40,000 Store equipment 200,000 Accumulated depreciation 76,800 Accounts payable 72,000 Line of credit loan 100,000 Common stock 50,000 Retained earnings 17,200