Question

Peyton Department Store prepares budgets quarterly. Thefollowing information is available for use in planning the secondquarter budgets for 2014.

PEYTON DEPARTMENTSTORE Balance Sheet March 31, 2014
Assets		Liabilities andStockholders' Equity
Cash	$ 3,000	Accounts payable	$26,000
Accounts receivable	25,000	Dividends payable	17,000
Inventory	30,000	Rent payable	2,000
Prepaid Insurance	2,000	Stockholders' equity	40,000
Fixtures	25,000
Total assets	$85,000	Total liabilities and equity	$85,000

Actual and forecasted sales for selected months in 2014 are asfollows:

Month	Sales Revenue
January	$ 60,000
February	50,000
March	40,000
April	50,000
May	60,000
June	70,000
July	90,000
August	80,000

Monthly operating expenses are as follows:

Wages and salaries	$ 25,000
Depreciation	100
Utilities	1,000
Rent	2,000

Cash dividends of $17,000 are declared during the third month ofeach quarter and are paid during the first month of the followingquarter. Operating expenses, except insurance, rent, anddepreciation are paid as incurred. Rent is paid during thefollowing month. The prepaid insurance is for five more months.Cost of goods sold is equal to 50 percent of sales. Endinginventories are sufficient for 120 percent of the next month'ssales. Purchases during any given month are paid in full during thefollowing month. All sales are on account, with 50 percentcollected during the month of sale, 40 percent during the nextmonth, and 10 percent during the month thereafter. Money can beborrowed and repaid in multiples of $1,000 at an interest rate of12 percent per year. The company desires a minimum cash balance of$3,000 on the first of each month. At the time the principal isrepaid, interest is paid on the portion of principal that isrepaid. All borrowing is at the beginning of the month, and allrepayment is at the end of the month. Money is never repaid at theend of the month it is borrowed.

(a) Prepare a purchases budget for each month of the secondquarter ending June 30, 2014.

Peyton DepartmentStore Monthly Purchase Budget Quarter Ending June 30, 2014
	April	May	June	Total
Budgeted purchases	$Answer	$Answer	$Answer	$Answer

(b) Prepare a cash receipts schedule for each month of thesecond quarter ending June 30, 2014. Do not include borrowings.

Peyton DepartmentStore Schedule of Monthly Cash Receipts Quarter Ending June 30, 2014
	April	May	June	Total
Total cash receipts	$Answer	$Answer	$Answer	$Answer

(c) Prepare a cash disbursements schedule for each month of thesecond quarter ending June 30, 2014. Do not include repayments ofborrowings.

Peyton DepartmentStore Schedule of Monthly Cash Disbursements Quarter Ending June 30, 2014
	April	May	June	Total
Total cash disbursements	$Answer	$Answer	$Answer	$Answer

(d) Prepare a cash budget for each month of the second quarterending June 30, 2014. Include budgeted borrowings andrepayments.

Only use negative signs, if needed, for: excess receiptsover disbursements, balance before borrowings and cash balances(beginning and ending).

Peyton Department Store Monthly Cash Budget Quarter Ending June 30, 2014
	April	May	June	Total
Cash balance, beginning	$Answer	$Answer	$Answer	$Answer
Receipts	Answer	Answer	Answer	Answer
Disbursements	Answer	Answer	Answer	Answer
Excess receipts over disb.	Answer	Answer	Answer	Answer
Balance before borrowings	Answer	Answer	Answer	Answer
Borrowings	Answer	Answer	Answer	Answer
Loan repayments	Answer	Answer	Answer	Answer
Cash balance, ending	$Answer	$Answer	$Answer	$Answer

(e) Prepare an income statement for each month of the secondquarter ending June 30, 2014.

Only use negative signs to show net losses forincome.

Peyton DepartmentStore Budgeted Monthly Income Statements Quarter Ending June 30, 2014
	April	May	June	Total
Sales	$Answer	$Answer	$Answer	$Answer
Cost of sales	Answer	Answer	Answer	Answer
Gross profit	Answer	Answer	Answer	Answer
Operating expenses:
Wages and salaries	Answer	Answer	Answer	Answer
Depreciation	Answer	Answer	Answer	Answer
Utilities	Answer	Answer	Answer	Answer
Rent	Answer	Answer	Answer	Answer
Insurance	Answer	Answer	Answer	Answer
Interest	Answer	Answer	Answer	Answer
Total expenses	Answer	Answer	Answer	Answer
Net income	$Answer	$Answer	$Answer	$Answer

(f) Prepare a budgeted balance sheet as of June 30, 2014.

Peyton DepartmentStore Budgeted Balance Sheet June 30, 2014
Assets		Liabilities andEquity
Cash	$Answer	Merchandise payable	$Answer
Accounts receivable	Answer	Dividend payable	Answer
Inventory	Answer	Rent payable	Answer
Prepaid insurance	Answer	Loans payable	Answer
Fixtures	Answer	Interest payable	Answer
Total assets	$Answer	Stockholders' equity	Answer
		Total liab. & equity	$Answer