Prepare a pro-forma income statement and balance sheet for the firm for the 2 month period from August 1st - September 30th
Use the following information, the cash budget, and the July 31st balance sheet:
1. Monthly sales are listed on the template. Sales are 40% for cash, 60% on account (credit).
2. Of the credit sales, 50% are collected in the month of sale and 50% in the month following the sale.
3. Gross profit margin on sales averages 40%. Cost of goods sold is strictly materials (inventory).
4. Depreciation is $150/month
5. Other expenses are 3% of sales (paid as incurred)
6 The store follows the policy of purchasing enough inventory each month to cover the following months sales at cost.
7. All inventory purchases are paid for one month after purchase.
8. A minimum cash balance of $6,000 is desired by the store, but no borrowing will take place during the forecast period.
9. Other current liabilities (on the balance sheet) remain unchanged.
10. Wages are paid one month after incurred.
11. The corporate tax rate is 40%. As of July 31st, all back taxes had been paid. No additional tax payment is due until December 15th.
12. A $10,000 dividend payment will be made in September.
13. The company has excess capacity.

Balance Sheet, July 31st
Cash	$6,000	Accrued Wages & Salaries	$1,500
Accounts Receivable	6,600	Accounts Payable	15,600
Inventory	21,500	Other liabilities	2,000
Furniture & Fixtures	19,000	Capital Stock	16,600
Accumulated Depreciation	-3,500	Retained Earnings	13,900
Total Assets	$49,600	Total L & E	$49,600

Cash Budget:

	Percent	July	August	Sep	Oct
Revenues	100%	22,000	26,000	25,000	19,000
Cash Inflows:
Cash	40%		10,400	10,000
Same Month	30%		7,800	7,500
One Month	30%		6,600	7,800	7,500
Total Collections:			24,800	25,300
Loan Proceeds:
Total Inflows:			24,800	25,300
Cash Outflows:
Inventory Purchases	60%		15,600	15,000	11,400
Wages			1,500	2,000	2,200
Rent	550		550	550
Other Expenses	3%		780	750
Dividend Payment	10,000			10,000
Fixed Assets	$ -
Total Outflows:			18,430	28,300
Beginning Cash Balance			6,000	12,370
Add: Inflows			24,800	25,300
Subract: Outflows			18,430	28,300
Unadjusted Cash Balance		6,000	12,370	9,370
Minimum Cash Balance			6,000	6,000
Surplus (Deficit) of Cash			6,370	3,370
Minimum Cash Balance	6,000