Question

a) Sales budget October November December Cash Sales $ 126,000.00 $ 157,500.00 $ 196,875.00 Sales on Account $ 154,000.00 $ 192,500.00 $ 240,625.00 Total Budgeted Sales $ 280,000.00 $ 350,000.00 $ 437,500.00 b) Schedule of cash receipts October November December Current Cash sales $ 126,000.00 $ 157,500.00 $ 196,875.00 Add: Collection From A/R $ $ 154,000.00 $ 192,500.00 Total Collections $ 126,000.00 $ 311,500.00 $ 389,375.00 C) Inventory purchase budget October November December Budgeted Cost of goods sold $ 168,000.00 $ 210,000.00 $ 262,500.00 Add: Desired Ending Inventory $ 21,000.00 $ 26,250.00 $ 13,600.00 Inventory Needed $ 189,000.00 $ 236,250.00 $ 276,100.00 Less: Beginning Inventory $ 16,800.00 $ 21,000.00 $ 26,250.00 Required Purchases on account $ 172,200.00 $ 215,250.00 $ 249,850.00

Answer 1

Note - Due to lack of information I have solved the question as per available information -

1. Cash Budget -

VERNON COMPANY Cash Budget For the Quarter Ended December 31, Year 1 October November December Cash Balance $ $ 28,240 $ 28,150 Cash Receipt: Collection from Customers $ 126,000 $ 311,500 $ 389,375 Total Cash Collection $ 126,000 $ 339,740 $ 417,525 Less: Cash Disbursement: Inventory Purchase Selling & Admin Expense Store Fixture purchase $ 137,760 $ 206,640 $ 242,930 $ 37,400 $ 52,800 $ 58,050 $ 237,600 Total Cash Disbursement $ 412,760 $ 259,440 $ 300,980 Cash Surplus/ Deficit $(286,760) $ 80,300 $ 116,545 Financing: Borrowing Payment Interest Payment Total $ 315,000 $ (49,000) $ (85,000) $ (3,150) $ (2,660) $ 315,000 $ (52,150) $ (87,660) Cash Balance, Ending $ 28,240 $ 28,150 $ 28,885

2. Income Statement -

VERNON COMPANY Pro Forma Income Statement For the Quarter Ended December 31, Year 1 Budgeted Sale $ 1,067,500 Budgeted Cost of Goods Sold $ 640,500 Gross Profit $ 427,000 Selling and Administrative Expense: Salary Sales Commission Supplies Expense Utilities Depreciation Rent Miscellaneous Interest Expense Total $ 58,800 $ 53,375 $ 21,350 $ 9,000 $ 16,800 $ 19,200 $ 8,400 $ 5,810 $ 192,735 Net Income $ 234,265

3. Balance Sheet -

VERNON COMPANY Pro Forma Balance Sheet December 31, Year 1 Assets: Cash $ 28,885 Accounts Receivable $ 240,625 Inventory $ 136,000 Equipment (Net) $ 220,700 Total Assets $ 626,210 Liabilities: Accounts Payable Sale Commission Payable Utilities Payable $ 49,970 $ 21,875 $ 3,000 $ 74,845 Notes Payable $ 181,000 Equity: Common Stock Retained Earnings $ 136,100 $ 234,265 $ 370,365 Total Liabilities and Equity $ 626,210

4. Cash Flow Statement -

VERNON COMPANY Statement of Cash Flows For the Quarter Ended December 31, Year 1 Cash flow from Operating Activities Cash Collected From Customers $ 826,875 Cash Paid to Suppliers $ (587,330) Cash Paid to Expenses $ (148,250) Cash Paid to Interest $ (5,810) Net Cash flow from Operating Activities $ 85,485 Cash flow from Investing Activities Purchase of Store Fixture $ 237,600) Net Cash flow from Investing Activities $ (237,600) Cash flow from Financing Activities Issue of Notes Payable Repayment of Notes Payable $ 315,000 $ (134,000) Net Cash flow from Finacing Activities $ 181,000 Change in Cash $ 28,885 Cash at the Beginning Cash at the End $ $ 28,885