Kent Corner Shoppe is a local convenience store with the following information: October sales were $250,000. Sales are projected to go up by 12% in November and another 30% in December and then return to the October level in January. 20% of sales are made in cash, while the remaining 80% are paid by credit or debit cards. The credit card companies and banks (debit card issuers) charge a 2% transaction fee and deposit the net amount (sales price less the transaction fee) in the store’s bank account daily. Kent Corner Shoppe’s gross profit is 25% of its sales revenue. For the next several months, the store wants to maintain an ending merchandise inventory equal to $15,000+15%$15,000+15% of the next month’s cost of goods sold. The September 30 inventory was $43,125. Expected monthly operating expenses include: Wages of store workers are $9,200 per month Utilities expense of $1,000 in November and $1,500 in December Property tax expense of $2,000 per month Property and liability insurance expense of $500 per month Depreciation expense of $6,500 per month Transactions fees, as stated above, are 2% of credit and debit card sales Requied: Prepare the following budgets for November and December: 1. Sales budget 2. Cost of goods sold, inventory and purchases budget 3. Operating expense 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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Kent Corner Shoppe is a local convenience store with the following information:

October sales were $250,000.
Sales are projected to go up by 12% in November and another 30% in December and then return to the October level in January.
20% of sales are made in cash, while the remaining 80% are paid by credit or debit cards. The credit card companies and banks (debit card issuers) charge a 2% transaction fee and deposit the net amount (sales price less the transaction fee) in the store’s bank account daily.
Kent Corner Shoppe’s gross profit is 25% of its sales revenue.
For the next several months, the store wants to maintain an ending merchandise inventory equal to $15,000+15%$15,000+15% of the next month’s cost of goods sold. The September 30 inventory was $43,125.
Expected monthly operating expenses include:
1. Wages of store workers are $9,200 per month
2. Utilities expense of $1,000 in November and $1,500 in December
3. Property tax expense of $2,000 per month
4. Property and liability insurance expense of $500 per month
5. Depreciation expense of $6,500 per month
6. Transactions fees, as stated above, are 2% of credit and debit card sales

Requied: Prepare the following budgets for November and December:

1. Sales budget

2. Cost of goods sold, inventory and purchases budget

3. Operating expense budget

4. Budgeted income statement

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