Problem 7-23A Preparing a master budget for retail company with no beginning account balances LO 7-2, 7-3, 7-4, 7-5, 7-6 Haas Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2015. 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.&b. October sales are estimated to be $250,000 of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 8 percent per month. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a sales budget and a schedule of cash receipts.

Sales budget october november december

Item	October	November	December
Sales Budget
Cash Sale	100000	108000	116640
Sale on account	150000	162000	174960
Total Budgeted Sale	250000	270000	291600
Schedule of cash recipts
Current cash sale	100000	108000	116640
collection from accounts receivable	-	150000	162000
Total collection	100000	258000	278640

c.&d. 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 months cost of goods sold. Ending inventory of December is expected to be $12,000. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month. Assume that all purchases are made on account. Prepare an inventory purchases budget and a cash payments budget for inventory purchases. (Round your answers to the nearest whole dollar amount.)

inventory purchases budget

budgeted cost of goods sold
plus desired ending inventory
inventory needed
less beginning inventory
required purchases on account
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

e.&f. Budgeted selling and administrative expenses per month follow.

Salary expense (fixed) $ 18,000
Sales commissions 5 percent of Sales
Supplies expense 2 percent of Sales
Utilities (fixed) $ 1,400
Depreciation on store fixtures (fixed)* $ 4,000
Rent (fixed) $ 4,800
Miscellaneous (fixed) $ 1,200

The capital expenditures budget indicates that Haas 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. 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 selling and administrative expenses budget and a cash payments budget for selling and administrative expenses. (Round your answers to nearest whole dollar amount.)

October November December

selling and administrative expense budget

salary expense
sales commissions
supplies expense
utilities
depreciation on store fixtures
rent
miscellaneous
total s&a 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