Haas Company is a retail company that specializes in selling outdoor camping equ

Question

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.

October sales are estimated to be $500,000, of which 30 percent will be cash and 70 percent will be credit. The company expects sales to increase at the rate of 20 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.

The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 20 percent of the next month’s cost of goods sold. However, ending inventory of December is expected to be $13,000. The company pays 60 percent of accounts payable in the month of purchase and the remaining 40 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.)

The capital expenditures budget indicates that Haas will spend $150,000 on October 1 for store fixtures, which are expected to have a $18,000 salvage value and a two-year (24-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.)

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 $18,000 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.)

Prepare a pro forma income statement for the quarter. (Round your answers to nearest whole dollar amount.)

Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.)

Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign. Round your answers to nearest whole dollar amount.)

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.

Explanation / Answer

Sales Budget,Schdule of Cash receipts October November December Total Prjected sales Cash sale 150000 180000 216000 546000 Credit Sales 350000 420000 504000 1274000 Total Budgeted sales 500000 600000 720000 1820000 Schedule of Cash receipts Current Month Cash sale 150000 180000 216000 546000     +100% previous month A/R 0 350000 420000 1316000 Total Budgeted Cash collection 150000 530000 636000 1862000 a) accounts Receivable on December 31 504000 c,d Budget For Purchases October November December Total Cost of Good Sold (60% of sales) 300000 360000 432000 1092000 Add: desired Ending inventory(20%of COGS) 72000 86400 13000 13000 Total Needs 372000 446400 445000 1105000 Less: Beginning Inventory 0 72000 86400 0 Purchases 372000 374400 358600 1105000 Schedule of Cash payment 60% of Current Purchases 223200 224640 215160 663000 40% ofin next month 0 148800 149760 298560 Total Budgeted Inventory payment 223200 373440 364920 961560 COGS 1092000 Inventory Balance 13000 Account Payable (358600*40%) 143440 e and F Projected S&A Expenses October November December Total Salary Expenses 19700 19700 19700 59100 Sales Commmission (6% of sales) 30000 36000 43200 109200 Supplies Expensez (3% of sales) 15000 18000 21600 54600 Utilities 1500 1500 1500 4500 Depreciation in Equipment 5500 5500 5500 16500 Rent 6100 6100 6100 18300 Miscelleneous 1500 1500 1500 4500 S& A Befor Interest 79300 88300 99100 266700 Schedule of Cash payment for s& A Expenses Salary Expenses 19700 19700 19700 59100 100% Prior month sales commission 0 30000 36000 66000 Supplies Expenses 15000 18000 21600 54600 100% Prior month Utilities 0 1500 1500 3000 Rent 6100 6100 6100 18300 Miscelleneous 1500 1500 1500 4500 Total Payment of S&A 42300 76800 86400 205500 Sales commissopn payable 43200 Utilities Payable 1500 S & A Expenses of the first qtr 266700 Ansg cash Budget January Feb Mar Total Beginnong cash balance 0 18500 18000 0 Add: cash receipts 150000 530000 636000 1316000 Total cash available 150000 548500 654000 1316000 cash payment For Inventory Purchase 223200 373440 364920 961560 For S&A Expenses 42300 76800 86400 205500 For Interest expense 2840 2066 4906 ourchase equipment 150000 150000 Total Budgeted Payments 415500 453080 453386 1321966 Fincincg activity Surplus/(shortage) -265500 95420 200614 -5966 Borrowings/(Repayments) 284000 -77420 -182614 23966 Ending cash balnce 18500 18000 18000 18000 Ans h Income Statement Sales Revenue 1820000 Less: COGS 1092000 Gross margin 728000 Selling & Admi. Expenses 266700 Operating Income 461300 Interest Expense 4906 Net Income 456394 Ans i Balance Sheet at the end of Qtr Assets Current assets Cash 18000 Accounts Receivable 504000 Inventory 13000 Total Current Assets 535000 Fixed Assets Store Fixtures 150000 Less: Accumulated Depreciation -16500 133500 Total Assets 668500 Liabilities Accounst payable 143440 Utilities Payable 1500 Sales Commission payable 43200 Short Term Borrowings 23966 Current Laibilities 212106 Retained earnings 456394 Total Laibilities & Equity 668500 Ans j Cash Flow statement Cash flow from Opeartins Received cash from customers 1316000 Paid to S&A Expenses -205500 Paid to suppliers -961560 Interest paid -4905.8 Net Cash flow from operating Activities 144034.2 Cash flow fron Investing activity Purchase of store fixtures 150000 Net Cash flow fron Investing activity -150000 Cash flow fron Financing activity Borrowings 24000 Net Cash flow fron Financing activity 24000 Net Increase in cash` 1$8034

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