5 Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening anew store on October 1, year 1. The company president formed a planning committee to prepare a master budget for the first threemonths of operation. As budget coordinator, you have been assigned the following tasks.Requireda. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expectssales to increase at the rate of 25 percent per month. Prepare a sales budget.b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale.Prepare a schedule of cash receipts.c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent ofthe next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchasesare made on account. Prepare an inventory purchases budget.d. The company pays 70 percent of accounts payable in the month of purchase and the remaining 30 percent in the following month.Prepare a cash payments budget for inventory purchases.e. Budgeted selling and administrative expenses per month follow.Salary expense (fixed)$18,000Sales commissions5% of SalesSupplies expense2% of SalesUtilities (fixed)$ 1,400Depreciation on store fixtures (fixed)*$ 4,000Rent (fixed)$ 4,800Miscellaneous (fixed)$ 1,200*The capital expenditures budget indicates that Adams will spend $164,000 on October 1 for store fixtures, which are expected tohave a $20,000 salvage value and a three-year (36-month) useful life.Use this information to prepare a selling and administrative expenses budget.f. Utilities and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which theyare incurred. Prepare a cash payments budget for selling and administrative expenses.g. Adams borrows funds, in increments of $1,000, and repays them on the last day of the month. Repayments may be made in anyamount available. The company also pays its vendors on the last day of the month. It pays interest of 1 percent per month in cash onthe last day of the month. To be prudent, the company desires to maintain a $12,000 cash cushion. Prepare a cash budget.h. Prepare a pro forma income statement for the quarter.1. Prepare a pro forma balance sheet at the end of the quarter.J. Prepare a pro forma statement of cash flows for the quarter.Complete this question by entering your answers in the tabs below.Required A Required B Required C Required D Required E Required F Required G Required H Required I Required JPrepare a selling and administrative expenses budget.OctoberNovember DecemberSelling and Administrative Expense BudgetSalary expenseSales commissionsSupplies expenseUtilitiesDepreciation on store fixturesRentMiscellaneousTotal S&A expenses

Hi student Since there are multiple subparts, we will answer only first three subparts. Budgets are…

Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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. Required a. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

Adams Company is a retail company that specializes in selling outdoor camping equipment. The company is considering opening a new store on October 1, year 1. 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. Required a. October sales are estimated to be $200,000, of which 40 percent will be cash and 60 percent will be credit. The company expects sales to increase at the rate of 25 percent per month. Prepare a sales budget. b. The company expects to collect 100 percent of the accounts receivable generated by credit sales in the month following the sale. Prepare a schedule of cash receipts. c. The cost of goods sold is 60 percent of sales. The company desires to maintain a minimum ending inventory equal to 10 percent of the next month's cost of goods sold. However, ending inventory of December is expected to be $12,000. Assume that all purchases are made on account. Prepare an inventory purchases budget.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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