Question: hi my question is regarding budgeted financial statements retailer everywhere...
Hi my question is regarding budgeted financial statements: retailer
Everywhere store is a retail store supplying sporting equipment to community sports clubs.
Here some info about the store's operations.
- November sales are $400,000
- Sales are budgeted $440,000 for December and $400,000 for Jan
- Receipts are expected to be 60% in the month of sale and 38% in the month following the sale. Two percent of sales are expected to be uncollectable.
- The store's gross margin is 25% of its sales revenue.
- A total of 80% of the merchandise for resale is purchased in the month prior to the month of sale and 20% is purchased in the month of sale. Payment for merchandise is made in the month following the purchase.
- Other monthly expenses paid in cash amount to $45,200
- Annual depreciation is $432,000
The balance sheet of Everywhere Sports as at 30 Nov is:
|Accounts receivable (net of $7,000 allowance for uncollectable accounts)||152 000|
|Property, plant and equipment (net of $1,180,000 accumulated depreciation)||1 724 000|
|Total assets||$2 200 000|
|Liabilities and shareholders' equity:|
|Accounts payable||324 000|
|Ordinary shares||1 590 000|
|Retained earnings||286 000|
Total liabilities and shareholders' equity: $2 200 000
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.
I have done this but I am stuck... I am getting mixed up with the months of December and January and how much I am to deduct. Also, what do I do with the depreciation? I need help please! :)
Thank you very much!