Budget PTORN Required infernation Required Part t ot 3 a. October sales are esti

Question

Budget PTORN Required infernation Required Part t ot 3 a. October sales are estimated 1o be $200,000 of which 40 percent wil be cash and 60 percent will be credit. The company expects b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale c. The cost of goods soid is 60 percont of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of sales to increase at the rate of 25 percent per month Prepare a sales budget Prepare a schedule of cash receips the nest month's cost of goods sold. However, ending inventory of December is expected to be $12000. Assume that all purchases are made on account Prepare an inventory purchases budget d. The company pays 70 percert of accounts payable in the month of purchase and the remaining 30 percent in the following month e. Budgeted soling and administrative expenses per month follow Prepare a cesh paymets budget tor inventory purchases Salary expense (fixed) sales connissions Supplies expense utiiitles (fixed) Depreciation on store fixtures (fixed)* Rent (fixed Miscellaneous (fixed) $18,860 5% of Sales 2% of Sales $ 1,48e 4,808 3 1,288 The cepital expenditures budget indicates that Adams wil spend $164,000 on October 1 for store fxtures, which are expected to have a 520 000 savage value and a trree-year (36-montho useful afe Use tss information to prepare a selling and administrative expenses budget es and sales comnissicns are paid the month ater they are incured, sl other expenses are psid in the month in which rey are incuced Prepare a cash payments budget for seling snd administrative expenses g. Adams borr ows funds, in increnents of $1000, and sepays them on the last day of the month Repayments may be made in any emount avaiable. The company aso pays its vendors on the last day of the month e pays interest of t percent per month in cash on $12,000 cash cushion Pregare a cash budget ast day of the manth To be prudernt, the compary desires to macean Proy 12-2 lil Next

Explanation / Answer

Prepare sales budget :

October November December Cash sales 80000 100000 125000 Sales on account 120000 150000 187500 Total budgeted sales 200000 250000 312500

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