Homework SourseOctober sales are estimated to be 300000 of which 40 percent
October sales are estimated to be $300,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 20 percent per month. Prepare a sales budget.
The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts.
The cost of goods sold is 70 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 $12,100. Assume that all purchases are made on account. Prepare an inventory purchases budget.
The company pays 80 percent of accounts payable in the month of purchase and the remaining 20 percent in the following month. Prepare a cash payments budget for inventory purchases.
Budgeted selling and administrative expenses per month follow:
*The capital expenditures budget indicates that Baird will spend $119,400 on October 1 for store fixtures, which are expected to have a $21,000 salvage value and a two-year (24-month) useful life.
Prepare a pro forma income statement for the quarter.
Prepare a pro forma balance sheet at the end of the quarter.
Prepare a pro forma statement of cash flows for the quarter.
Required J
Prepare a pro forma statement of cash flows for the quarter. (Amounts to be deducted should be indicated by a minus sign.)
Prepare a pro forma balance sheet at the end of the quarter. (Amounts to be deducted should be indicated by a minus sign.)
Required H
Required I
Required J
Prepare a pro forma income statement for the quarter.
| Salary expense (fixed) | $ | 18,100 | |
| Sales commissions | 4 | % of Sales | |
| Supplies expense | 2 | % of Sales | |
| Utilities (fixed) | $ | 1,500 | |
| Depreciation on store fixtures (fixed)* | $ | 4,100 | |
| Rent (fixed) | $ | 4,900 | |
| Miscellaneous (fixed) | $ | 1,300 | |
Solution
Baird Company
Proforma Statement of cash flow
for the Quarter ended December 31st
Cash from Operating Activities
Inflow from revenue
$ 327,600.00
Outflow for Administrative expenses
$ (88,620.00)
Increase in Value of Inventory
$ (12,100.00)
Icrease In Accounts Receivables
$ (259,200.00)
Icrease In Accounts Payable
$ 25,402.00
(A)Net outflow from Operating Activities
$ (6,918.00)
Cash flow from Investing Activities
Purchase of Fixtures
$ (119,400.00)
(B)Net outflow from Investing Activities
$ (119,400.00)
Cash Flow from Financing Activities
Proceeds by issue of Common Stock
$ -
(C )Net Inflow from Financing Activities
$ -
(A+B+C) Cash Generated During Year
$ (126,318.00)
Beginning cash Balance
$ -
Closing cash balance
$ (126,318.00)
Baird Company
Proforma Balance Sheet For Quarter Ended December
Assets
Accounts Receivable
$ 259,200.00
Closing Stock
$ 12,100.00
Fixed Assets (Store Fixtures)
$ 107,100.00
Total Assets
$ 378,400.00
Liabilities
Bank Overdraft
$ 126,318.00
Accounts Payables
$ 25,402.00
Shareholder\'s Funds (equity)
$ 226,680.00
Total Liabilities
$ 378,400.00
Baird Company
Proforma Income Statement For Quarter Ended December
Revenue
$ 1,092,000.00
Less-Purchases
$ 776,500.00
Add-Closing Stock
$ 12,100.00
Gross Profit
$ 327,600.00
Less Expenses
$ 100,920.00
Net Profit
$ 226,680.00
Calculation of Expenses
October
November
December
Sales Commission
$ 12,000.00
$ 14,400.00
$ 17,280.00
Supplies Expenses
$ 6,000.00
$ 7,200.00
$ 8,640.00
Utilities
$ 1,500.00
$ 1,500.00
$ 1,500.00
Depreciation on Stores Fixtures
$ 4,100.00
$ 4,100.00
$ 4,100.00
Rent
$ 4,900.00
$ 4,900.00
$ 4,900.00
Misselanious
$ 1,300.00
$ 1,300.00
$ 1,300.00
$ 29,800.00
$ 33,400.00
$ 37,720.00
Sales Budget
October
November
December
Sales
$ 300,000.00
$ 360,000.00
$ 432,000.00
Cash Sales
$ 120,000.00
$ 144,000.00
$ 172,800.00
Credit Sales
$ 180,000.00
$ 216,000.00
$ 259,200.00
Schedule of Cash Receipts
October
November
December
Receivable at the end of December
Cash Sales
$ 120,000.00
$ 144,000.00
$ 172,800.00
Cash Received Against Previous Month Credit Sales
$ -
$ 180,000.00
$ 216,000.00
Total Cash Receipts
$ 120,000.00
$ 324,000.00
$ 388,800.00
$ 259,200.00
Inventory Purchases Budget
October
November
December
Opening Inventory
$ -
$ 50,400.00
$ 60,480.00
Purchases (balancing Figure)
$ 260,400.00
$ 262,080.00
$ 254,020.00
Closing Inventory Needed
$ 50,400.00
$ 60,480.00
$ 12,100.00
Cost of Goods Sold
$ 210,000.00
$ 252,000.00
$ 302,400.00
Cash Payment Budget
October
November
December
Payable In december
Purchases
$ 260,400.00
$ 262,080.00
$ 254,020.00
Payment of 80% in same Month
$ 234,360.00
$ 235,872.00
$ 228,618.00
Payment Of 20% in Next Month
$ -
$ 26,040.00
$ 26,208.00
$ 25,402.00
Cash Expenses (Total Expenses less Depreciation)
$ 25,700.00
$ 29,300.00
$ 33,620.00
Capital Expenditure
$ 119,400.00
Total Cash Paid
$ 379,460.00
$ 291,212.00
$ 288,446.00
| Baird Company | |||
| Proforma Statement of cash flow | |||
| for the Quarter ended December 31st | |||
| Cash from Operating Activities | |||
| Inflow from revenue | $ 327,600.00 | ||
| Outflow for Administrative expenses | $ (88,620.00) | ||
| Increase in Value of Inventory | $ (12,100.00) | ||
| Icrease In Accounts Receivables | $ (259,200.00) | ||
| Icrease In Accounts Payable | $ 25,402.00 | ||
| (A)Net outflow from Operating Activities | $ (6,918.00) | ||
| Cash flow from Investing Activities | |||
| Purchase of Fixtures | $ (119,400.00) | ||
| (B)Net outflow from Investing Activities | $ (119,400.00) | ||
| Cash Flow from Financing Activities | |||
| Proceeds by issue of Common Stock | $ - | ||
| (C )Net Inflow from Financing Activities | $ - | ||
| (A+B+C) Cash Generated During Year | $ (126,318.00) | ||
| Beginning cash Balance | $ - | ||
| Closing cash balance | $ (126,318.00) |
