Problem 7-23A Preparing a master budget for retail company with no beginning acc
ID: 2459485 • Letter: P
Question
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
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 month’s 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
payment for prior month's accounts payable
e.&f. Budgeted selling and administrative expenses per month follow.
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
schedule of cash payments for s&a expenses
g. Haas 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/shortage which should be indicated with a minus sign. Round your answers to nearest whole dollar amount.) Cash Budget
October November December
cash budget
total budgeted payments
h. Prepare a pro forma income statement for the quarter. (Round your answers to nearest whole dollar amount.)
i. Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.)
HAAS COMPANY
pro forma income statement
for the quarter ended december 31,2015
j. Prepare a pro form statement of cash flow for the quarter
hass company
pro forms statement of cash flows
for the quarter ended december 31, 2015
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 278640Explanation / Answer
Buget type
Sr. No
Particulars
October
November
December
Sales buget
1
Sales
250000
270000
291600
Schedule of cash receipts
2
Cash 40%
100000
108000
116640
3
Credit 60%
150000
162000
174960
4
Collection from credit sales
150000
162000
5
COGS (60% of sales)
150000
162000
174960
6
Ending inventory (10% of next months COGS)
16200
17496
12000
7
Opening inventory
0
16200
17496
8
Purchase (5+6-7)
166200
163296
169464
Cash payment buget
9
Payment 70% of purchase in same month
116340
114307.2
118624.8
10
Payment 30% of purchase in next month
49860
48988.8
Selling and admin exp buget
11
Salary expenses
18000
18000
18000
12
Sales comission 5% of sales
12500
13500
14580
13
Supply exp 2% of sales
5000
5400
5832
14
Utility
1400
1400
1400
15
Depreciation
4000
4000
4000
16
Rent
4800
4800
4800
17
Misscelenious
1200
1200
1200
Cash payment of selling and admin exp
18
Salary expenses
18000
18000
18000
19
Sales comission 5% of sales
12500
13500
20
Supply exp 2% of sales
5000
5400
5832
21
Utility
1400
1400
22
Rent
4800
4800
4800
23
Misscelenious
1200
1200
1200
FA cash buget
24
Store fixture
164000
25
Salvage value
Cash flow statement
2+4-9-10-18-19-20-21-22-23-24+25
Net cash flows
-209340
50532.8
66294.4
Opening balance
0
12660
12972
Closing balance
12000
12000
12000
18
Interest payment
2220
1740
Shortage/excess
-221340
48972.8
65526.4
Bank loan
222000
-48000
-65000
Income statement
1-5-11-12-13-14-15-16-17-18
Net income
53100
57480
65088
Balancesheet
Assets
Cash
12527
Stock
12000
Furniture fixures (164000-12000)
152000
Receivables
174960
Total
351487
Liabilities
Sales comission
14580
Utility
1400
Bank loan
109000
Net income
175668
Payables
50839
Total
351487
Buget type
Sr. No
Particulars
October
November
December
Sales buget
1
Sales
250000
270000
291600
Schedule of cash receipts
2
Cash 40%
100000
108000
116640
3
Credit 60%
150000
162000
174960
4
Collection from credit sales
150000
162000
5
COGS (60% of sales)
150000
162000
174960
6
Ending inventory (10% of next months COGS)
16200
17496
12000
7
Opening inventory
0
16200
17496
8
Purchase (5+6-7)
166200
163296
169464
Cash payment buget
9
Payment 70% of purchase in same month
116340
114307.2
118624.8
10
Payment 30% of purchase in next month
49860
48988.8
Selling and admin exp buget
11
Salary expenses
18000
18000
18000
12
Sales comission 5% of sales
12500
13500
14580
13
Supply exp 2% of sales
5000
5400
5832
14
Utility
1400
1400
1400
15
Depreciation
4000
4000
4000
16
Rent
4800
4800
4800
17
Misscelenious
1200
1200
1200
Cash payment of selling and admin exp
18
Salary expenses
18000
18000
18000
19
Sales comission 5% of sales
12500
13500
20
Supply exp 2% of sales
5000
5400
5832
21
Utility
1400
1400
22
Rent
4800
4800
4800
23
Misscelenious
1200
1200
1200
FA cash buget
24
Store fixture
164000
25
Salvage value
Cash flow statement
2+4-9-10-18-19-20-21-22-23-24+25
Net cash flows
-209340
50532.8
66294.4
Opening balance
0
12660
12972
Closing balance
12000
12000
12000
18
Interest payment
2220
1740
Shortage/excess
-221340
48972.8
65526.4
Bank loan
222000
-48000
-65000
Income statement
1-5-11-12-13-14-15-16-17-18
Net income
53100
57480
65088
Balancesheet
Assets
Cash
12527
Stock
12000
Furniture fixures (164000-12000)
152000
Receivables
174960
Total
351487
Liabilities
Sales comission
14580
Utility
1400
Bank loan
109000
Net income
175668
Payables
50839
Total
351487