Beach Incorporated, a wholesale distribution company of surfboards, considering

Question

Beach Incorporated, a wholesale distribution company of surfboards, considering whether to open a new distribution center located in San Diego, California. The center would open January 1, 2017. To make the decision, the board of directors requires a master budget for the centr's first quarter of operation (January, February and March of 2017). You are to construct the 1^st quarter master budget based on the following expectations: January sales are estimated to be dollar 150,000 of which dollar 50,000 will be cash sales and dollar 100.000 will be on credit. The company expects sales to grow 10 dollar per month for the first few months of operations. Prepare a sales budget for the first quarter. Beach expects to collection 100 percentage of accounts receivable in the month following the sale. Estimated cash sales each month equals 25 percentage of sales. Prepare a schedule of expected cash receipts for the first quarter. Using the information developed in requirements a and b to determine the amount of accounts receivable on March 31, pro forma balance sheet and the amount of sales for the first quarter pro forma income statement. Cost of goods sold will be 60 percentage of sales. Beach's policy is to budget an ending inventory balance equal to 25 percentage of the next month's projected cost of goods sold. Assume Beach expects April cost of goods sold to be dollar 119,790. Prepare an inventory purchases budget. All inventory purchases are on account. Beach pays 70 percentage of accounts payable in the month of purchase. It pays remaining 30 percentage in the following month. Prepare a schedule of expected cash payments for Inventory purchases. Use the information developed in requirements d and e to determine the amount of cost of goods sold on the first quarter pro forma income statement and the amounts of ending inventory and accounts payable on the March 31 pro forma balance sheet.

Explanation / Answer

Answer:a

Answer:b

Answer:c

Answer:d

Answer:e

Sales Budget Particulars Jan Feb March Quarter Totals sales 150000 165000 181500 496500

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