Question

Required information The following information applies to the questions displayed below.) Rundle Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, 2019. 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: h. Prepare a pro forma income statement for the quarter. i. Prepare a pro forma balance sheet at the end of the quarter. j. Prepare a pro forma statement of cash flows for the quarter.

Answer 1

Answer with working is given below

Sales Budget Sales Budget Cash sales Sales on Account October $350,000 $122,500 $227,500 November December Total $420,000 $504,000 $1,274,000 $147,000 $176,400 $445,900 $273,000 $327,600 $828,100 B Schedule of Cash Receipts October $122,500 Current Cash Sales Plus collections from A/R Total Collections November December | Total $147,000 $176,400 $445,900 $227,500 $273,000 $500,500 $374,500 $449,400 $946,400 $122,500 Cost of Goods Sold Sales Cost of Goods Sold -70% | October $350,000 $245,000 November December Total $420,000 $504,000 $1,274,000 $294,000 $352,800 $891,800 C Inventory Purchase Budget COGS Add: Closing stock (20% of next month COGS) Inventory Needed Less Opening Stock Required Purchase (On Account) | October $245,000 $58,800 $303,800 November December $294,000 $352,800 $70,560 $13,100 $364,560 $365,900 $58,800 $70,560 $305,760 $295,340 Total $891,800 $13,100 $904,900 $0 $904,900 $303,800 Schedule of Cash payment for purchases October November December Total $182,280 Payment Payment of Current Moth Account payable Payment for prior month Accounts payable Total payment for purchases $183,456 $121,520 $304,976 $177,204 $122,304 $299,508 $542,940 $243,824 $786,764 | $182,280 Selling and Administrative Expense budget Salary expense Sales commission (4% of Sales) Supplies expense ( 2% of Sales) Utilities Depreciation on stores fixtures Rent Miscellaneous October $19,100 $14,000 $7,000 $2,500 $5,100 $5,900 $2,300 November December | $19,100 $19,100 $16,800 $20,160 $8,400 $10,080 $2,500 $2,500 $5,100 $5,100 $5,900 $5,900 $2,300 $2,300 Total $57,300 $50,960 $25,480 $7,500 $15,300 $17,700 $6,900 Total Selling and administrative expense 55,900 60,100 65,140 181,140 Schedule of Cash payments for S & A Expenses Salary expense Sales commission (4% of Sales) Supplies expense ( 2% of Sales) Utilities Rent Miscellaneous Total cash for Selling and administrative expense October November December | Total $19,100 $19,100 $19,100 $57,300 $14,000 $16,800 $30,800 $7,000/ $8,400 $10,080 $25,480 $2,500 $2,500 $5,000 $5,900 $5,900 $5,900 $17,700 $2,300 $2,300 $2,300 $6,900 $34,300 $52,200 $56,680 $143,180 C G Cash Budget October $122,500 $122,500 November December $23,852 $23,000 $374,500 $449,400 $398,352 $472,400 Total $0 $946,400 $946,400 $304,976 $52,200 Opening Balance of Cash Cash Collections from customers Cash available for disbursement Payments for Merchandise purchase (paid at end of the month) Selling and administrative expense Purchase of Stores fixtures Cash paid for disbursements Net Cash available Financing Borrowings (at the beginning of the month) Borrowings (at the end of the month) Repayments at the end of month) Interest (at 2% per month) Total financing Closing cash balance $182,280 $34,300 $153,4001 $369,980 $247,480 $299,508 $786,764 $56,680 $143,180 $153,400 $356,188 $1,083,344 $116,212 -$136,944 $357,176 $41,176 $153,400 $121,000 $153,400 $121,000 - $87,978 -$100,666 -$5,234 $13,790 -$93,212 $159,944 $23,000 $23,000 $12,688 $5,488 $18,176 $23,000 -$3,068 $271,332 $23,852

$1,274,000 $891,800 $382,200 RUNDLE COMPANY Performa Income Statement For the Quarter Needed December 31st, 2019 Sales Less Cost of Goods Sold Gross profit Salary expense $57,300 Sales commission (4% of Sales) $50,960 Supplies expense ( 2% of Sales) $25,480 Utilities $7,500 Depreciation on stores fixtures $15,300 Rent $17,700 Miscellaneous $6,900 Interest on short term loans $13,790 $194,930 $187,270 Net Income RUNDLE COMPNAY Proforma Balance Sheet December 31st, 2019 Assets Current Assets Cash Accounts receivable Inventory $23,000 $327,600 $13,100 $363,700 $153,400 -$15,300 $138,100 $501,800 Fixed Assets Stores fixture Less: Depreciation during the year Total Assets Current liabilities Accounts payable Outstanding expense Short term borrowing Total Current Liabilities Stockholders' equity Retained earnings Total Liabilities and Stockholders' Equity $118,136 $22,660 $173,734 $314,530 $187,270 $501,800 Budgeted Statement of Retained Earnings Retained earnings - Opening Balance Add: Net profit Retained earnings - Closing Balance 187,270 187,270 Accounts receivable closing balance Opening Balance Add : Sales Less: Collection Closing Balance 1,274,000 -946,400 327,600 Accounts payable closing balance Opening Balance Add: Purchases Less: Payment Closing Balance 904,900 -786,764 118,136 RUNDLE COMPNAY Proforma Statement of Cash flows For the Quarter Ended December 31st, 2019 Cash Flow from Operating Activities Cash received from Customers $946,400 Cash payment to Vendors -$786,764 Cash payment for Operating Expenses -$143,180 Interest paid to Bank $13,790 Net cash from Operating Activities $2,666 Cash Flow from Investing Activities Purchase of Stores Fixtures $153,400 $274,400 -$100,666 Cash Flow from Financing Activities Short term borrowing Repayment of Short term borrowing Net cash from Financing Activities Net Cash inflow/(Outflow) Cash-Closing balance $173,734 $23,000 $23,000

Sales Budget A October Total November December Sales Budget $420,000 $147,000 $273,000 $504,000 $1,274,000 $350,000 $122,500 $227,500 $176,400 Cash sales $445,900 $327,600 $828,100 Sales on Account Schedule of Cash Receipts November December Total October $176,400 $445,900 $273,000 $500,500 $449,400 $946,400 $122,500 $147,000 $227,500 $374,500 Current Cash Sales Plus collections from A/R $122,500 Cash received from Debtors COGS November December $420,000 $294,000 October Total $504,000 $1,274,000 $352,800 $891,800 Sales Cost of Goods Sold -70% $350,000 $245,000 Purchase Budget C November December $294,000 $70,560 $364,560 $58,800 $305,760 October Total $245,000 $58,800 $303,800 $352,800 $13,100 $365,900 $904,900 $70,560 $295,340$904,900 $891,800 $13,100 COGS Add: Closing stock (20% of next month COGS) Total Needs Less Opening Stock $0 Required Purchase (On Account) $303,800 Schedule of Cash payment for purchases November December October Total Payment Payment of Current Moth Account payable Payment for prior month Accounts payable $183,456 $121,520 $304,976 $177,204 $542,940 $182,280 $122,304 $243,824 $182,280 $299,508$786,764 Total payment for purchases Selling and administrative Expense budget November December Total October $19,100 $20,160 Salary expense Sales commission (4% of Sales) Supplies expense ( 2% of Sales) $19,100 $14,000 $7,000 $2,500 $5,100 $5,900 $2,300 $19,100 $57,300 $50,960 $16,800 $10,080 $2,500 $8,400 $2,500 $5,100 $5,900 $2,300 $25,480 $7,500 Utilities Depreciation on stores fixtures $5,100 $5,900 $2,300 $15,300 Rent $17,700 $6,900 Miscellaneous 60,100 55,900 65,140 Total Selling and administrative expense 181,140 Schedule of Cash payments for S & A Expenses October November December Total $19,100 $14,000 $8,400 $2,500 $5,900 $2.300 $52,200 $19,100 $16,800 Salary expense Sales commission (4% of Sales) Supplies expense ( 2% of Sales) $19,100 $57,300 $30,800 $25,480 $7,000 $10,080 $2,500 $5,900 $2,300 $56,680$143,180 $5,000 Utilities $5,900 $2,300 $17,700 Rent Miscellaneous $6,900 $34,300 Total cash for Selling and administrative expense Cash Budget G November December $23,560 October Total Opening Balance of Cash Cash Collections from customers Cash available for disbursement $23,444 $449,400 $472,844$946,400 $0 $946,400 $122,500 $122,500 $374,500 $398,060 Payments for Selling and administrative expense Purchase of Stores fixtures $56,680 $143,180 $34,300 $52,200 $153,400 $153,400 $56.680 Cash paid for disbursements Net Cash available Financing Borrowings (at the beginning of the month) Net balance $52,200 $187,700 $296,580 -$65,200 $416,164 $649,820 $345,860 $48,000 $48,000 $345,860 $416,164$697,820 -$17,200 $182,280 -$199,480 Merchandise purchase (paid at end of the month) Total net cash Financing Borrowings (at the end of the month) Repayments (at the end of month) Interest (at 2% per month) Total financing $304,976 $299,508$786,764 -$88,944| $40,884 $116,656 $224,000 $224,000 -$12,000 -$5,440 -$88,456-$100,456 -$5,200 -$93,656$111,944 $23,000 -$960 $223,040 $23,560 -$11,600 -$17,440 $23,444 $23,000 Closing cash balance

RUNDLE COMPANY H Performa Income Statement For the Quarter Needed December 31st, 2019 $1,274,000 Sales Less $891,800 Cost of Goods Sold Gross profit Salary expense Sales commission (4% of Sales) Supplies expense (2% of Sales) Utilities Depreciation on stores fixtures $382,200 $57,300 $50,960 $25,480 $7,500 $15,300 $17,700 $6,900 Rent Miscellaneous $11,600 Interest on short term loans $192,740 $189,460 Net Income RUNDLE COMPNAY Proforma Balance Sheet December 31st, 2019 Assets Current Assets Cash $23,000 Accounts rece ivable Inventory $327,600 $13,100 $363,700 Fixed Assets $153,400 Stores fixture Less: Depreciation during the year $138,100 $501,800 -$15,300 Total Assets Current liabilities Accounts payable Outstanding expense Short term borrowing $118,136 $22,660 $171,544 $312,340 Total Current Liabilities Stockholders' equity Retained earnings $189,460 $501,800 Total Liabilities and Stockholders' Equity Budgeted Statement of Retained Earnings earnings Add: Net profit Retained earnings 189,460 189,460 Accounts receivable closing balance Opening Balance 1,274,000 946,400 Add: Sales Less: Collection Closing Balance 327,600 Accounts payable closing balance Opening Balance Add: Purchases 904,900 Less: Payment Closing Balance -786,764 118,136 RUNDLE COMPNAY Proforma Statement of Cash flows For the Quarter Ended December 31st, 2018 Cash Flow from Operating Activities Cash received from Customers $946,400 -$786,764 -$143,180 -$11,600 Cash payment to Vendors Cash payment for Operating Expenses Interest paid to Bank Net cash from Operating Activities $4,856 Cash Flow from Investing Activities Purchase of Stores Fixtures -$153,400 Cash Flow from Financing Activities Short term borrowing Repayment of Short term borrowing Net cash from Financing Activities Net Cash inflow/(Outflow) $272,000 -$100,456 $171,544 $23,000 $23,000 Cash- Closing balance