Budgeted Anancial statements: retaller
Everywhere Sports Is a retall store supplying sporing equipment to community sports
clubs. Information
about the store's operations is as follows:
November sales amounted to $400 000
Sales are budgeted at $440 000 for December and $400 000 for January.
Receipts are expected to be 60 per cent in the month of sale and 38 per cent in the month following the
sale. Two per cent of sales receipts are expected to be uncollectable
The store's gross margin is 25 per cent of its sales revenue
A total of 8O per cent of the merchandise for resale IS purchased in the month prior to the month of sale.
and 20 per centis purchased in the month of sale. Paymentf fori merchandise IS made in the month following
the purchase,
Other monthly expenses pald in cash amount to $45 200
Annual depreciation is $432 000
The balance sheet of Everywhere Sports as at 30 November is
Everywhere Sports
Balance sheet 30 November
Asset:
Cash
44000
152 000
280 000
1724 000
$2 200 000
Accounts reccivable (net of $7 000 allowance for uncollectable accounts)
Inventory
Property. plant and equipment (net of $1 180 000 accumulated depreciation)
Total asscts
Liabiliues and sharcholders' cquity:
Accounts payable
Ordinary shares
Retained earnings
Total liabilities and sharcholders' equity
324 000
1590 000
286000
$2_200 000
Required:
Calculate the following amounts:
1. budgeted cash receipts for December
2. budgeted profit (loss) before income taxes for December
3. projected balance in accounts payable on 31 December.
Budgeted Anancial statements: retaller
Everywhere Sports Is a retall store supplying sporing equipment to community sports
clubs. Information
about the store's operations is as follows:
November sales amounted to $400 000
Sales are budgeted at $440 000 for December and $400 000 for January.
Receipts are expected to be 60 per cent in the month of sale and 38 per cent in the month following the
sale. Two per cent of sales receipts are expected to be uncollectable
The store's gross margin is 25 per cent of its sales revenue
A total of 8O per cent of the merchandise for resale IS purchased in the month prior to the month of sale.
and 20 per centis purchased in the month of sale. Paymentf fori merchandise IS made in the month following
the purchase,
Other monthly expenses pald in cash amount to $45 200
Annual depreciation is $432 000
The balance sheet of Everywhere Sports as at 30 November is
Everywhere Sports
Balance sheet 30 November
Asset:
Cash
44000
152 000
280 000
1724 000
$2 200 000
Accounts reccivable (net of $7 000 allowance for uncollectable accounts)
Inventory
Property. plant and equipment (net of $1 180 000 accumulated depreciation)
Total asscts
Liabiliues and sharcholders' cquity:
Accounts payable
Ordinary shares
Retained earnings
Total liabilities and sharcholders' equity
324 000
1590 000
286000
$2_200 000
Required:
Calculate the following amounts:
1. budgeted cash receipts for December
2. budgeted profit (loss) before income taxes for December
3. projected balance in accounts payable on 31 December.
Related questions
Capes Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
Sales are budgeted at $370,000 for November, $380,000 for December, and $360,000 for January.
Collections are expected to be 45% in the month of sale and 55% in the month following the sale.
The cost of goods sold is 70% of sales.
The company desires an ending merchandise inventory equal to 25% of the cost of goods sold in the following month. Payment for merchandise is made in the month following the purchase.
The November beginning balance in the accounts receivable account is $72,000.
The November beginning balance in the accounts payable account is $259,000.
Required:
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
Required B
Prepare a Merchandise Purchases Budget for November and December.
Prepare a Schedule of Expected Cash Collections for November and December.
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