Question

Thornton 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:

1. Budgeted selling and administrative expenses per month follow:

Salary expense (fixed)	$	19,500
Sales commissions		4	% of Sales
Supplies expense		2	% of Sales
Utilities (fixed)	$	2,900
Depreciation on store fixtures (fixed)*	$	5,500
Rent (fixed)	$	6,300
Miscellaneous (fixed)	$	2,700

1. *The capital expenditures budget indicates that Thornton will spend $167,000 on October 1 for store fixtures, which are expected to have a $35,000 salvage value and a two-year (24-month) useful life.

Use this information to prepare a selling and administrative expenses budget.

6. 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 cash payments budget for selling and administrative expenses.

7. Thornton 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 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $27,000 cash cushion. Prepare a cash budget.

   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 cash payments budget for selling and administrative expenses.

   	October November December Schedule of Cash Payments for S&A Expenses Salary expense Sales commissions Supplies expense Utilities Depreciation on store fixtures Rent Miscellaneous Total payments for S&A expenses $0 $0 $0

Thornton 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 2 percent per month in cash on the last day of the month. To be prudent, the company desires to maintain a $27,000 cash cushion. Prepare a cash budget. (Any repayments/shortage which should be indicated with a minus sign.)

Show less

	Cash Budget October November December Cash available 0 0 0 Less: Payments Total budgeted payments 0 0 0 Payments minus receipts 0 0 0 Financing activity $0 $0 $0

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.

Requirement E	Selling and Administrative Budget
		October	November	December	Total
Salary Expenses		$         19,500	$                    19,500	$         19,500	$         58,500
Sales Commission	4% of Sale	$         16,000	$                    20,800	$         27,040	$         63,840
Supplies Expense	2% of Sale	$            8,000	$                    10,400	$         13,520	$         31,920
Utilities		$            2,900	$                       2,900	$            2,900	$           8,700
Depreciation		$            5,500	$                       5,500	$            5,500	$         16,500
Rent		$            6,300	$                       6,300	$            6,300	$         18,900
Miscellaneous		$            2,700	$                       2,700	$            2,700	$           8,100
Total Selling and Admin Expense		$         60,900	$                    68,100	$         77,460	$       206,460
Less: Non Cash		$            5,500	$                       5,500	$            5,500	$         16,500
Cash disbursment for Selling and Admin		$         55,400	$                    62,600	$         71,960	$       189,960
Requirement F	Schedule of Cash Payment for S&A
		October	November	December	Total
Salary Expenses		$         19,500	$                    19,500	$         19,500	$         58,500
Sales Commission			$                    16,000	$         20,800	$         36,800
Supplies Expense		$            8,000	$                    10,400	$         13,520	$         31,920
Utilities			$                       2,900	$            2,900	$           5,800
Depreciation		$                   -	$                              -	$                   -	$                  -
Rent		$            6,300	$                       6,300	$            6,300	$         18,900
Miscellaneous		$            2,700	$                       2,700	$            2,700	$           8,100
Total Payment for S&A Expenses		$         36,500	$                    57,800	$         65,720	$       160,020
Requirement G	Cash Budget
		October	November	December	Total
Beginning Cash Balance		$                   -	$                    27,540	$         27,000	$                  -
Add: Cash Receipts		$       160,000	$                  448,000	$       582,400	$   1,190,400
Cash Available		$       160,000	$                  475,540	$       609,400	$   1,190,400
Cash Payment for:
Inventory Purchase		$       246,960	$                  375,928	$       390,194	$   1,013,082
Selling and Admin Expense		$         36,500	$                    57,800	$         65,720	$       160,020
Store Furniture		$       167,000			$       167,000
Interest Expense					$                  -
Total Budgeted Payment		$       450,460	$                  433,728	$       455,914	$   1,340,102