BUS 622-Haas Company is a retail company that specialize

BUS 622Chapter 12 CaseHaas Company is a retail company that specializes in selling outdoor campingequipment. The company is considering opening a new store on October 1,2015. The company president formed a planning committee to prepare amaster budget for the first three months of operation. As budget coordinator,you have been assigned the following tasks.RequiredRound all computations to two decimal points.a. October sales are estimated to be $250,000, of which 40 percent will be cashand 60 percent will be credit. The company expects sales to increase at therate of 8 percent per month. Prepare a sales budget.b. The company expects to collect 100 percent of the accounts receivablegenerated by credit sales in the month following the sale. Prepare a schedule ofcash receipts.c. The cost of goods sold is 60 percent of sales. The company desires to maintaina minimum ending inventory equal to 10 percent of the next month’s cost ofgoods sold. However, ending inventory of December is expected to be $12,000.Assume that all purchases are made on account. Prepare an inventorypurchases budget.d. The company pays 70 percent of accounts payable in the month of purchaseand the remaining 30 percent in the following month. Prepare a cash paymentsbudget for inventory purchases.e. Budgeted selling and administrative expenses per month follow.Use this information to prepare a selling and administrative expenses budget.f. Utilities and sales commissions are paid the month after they are incurred; allother expenses are paid in the month in which they are incurred. Prepare acash payments budget for selling and administrative expenses.g. Haas borrows funds, in increments of $1,000, and repays them on the last dayof the month. Repayments may be made in any amount available. Thecompany also pays its vendors on the last day of the month. It pays interest of1 percent per month in cash on the last day of the month. To be prudent, thecompany desires to maintain a $12,000 cash cushion. Prepare a cash budget.h. Prepare a pro forma income statement for the quarter.i. Prepare a pro forma balance sheet at the end of the quarter.j. Prepare a pro forma statement of cash flows for the quarter.Student Name:Class:Problem 07-23AHAAS COMPANYa. Sales BudgetCash salesSales on accountTotal budgeted salesOctoberNovemberDecemberPro Formab. Schedule of Cash ReceiptsCurrent cash salesPlus collections from A/RTotal collectionsOctoberNovemberDecemberPro FormaNovemberDecemberPro FormaDataOctoberNovemberDecemberPro FormaDataOctoberNovemberDecemberPro FormaDatac. Inventory Purchases BudgetOctoberBudgeted cost of goods soldPlus desired ending inventoryInventory neededLess beginning inventoryRequired purchases (on account)d. Schedule of Cash Payments Budget for Inventory PurchasesPayment of current month’s A/PPayment for prior month’s A/PTotal budgeted paymentse. Selling and Administrative Expense BudgetSalary expenseSales commissionsSupplies expenseUtilitiesDepreciation on store fixturesRentMiscellaneousTotal S&A expensesStudent Name:Class:Problem 07-23Af. Schedule of Cash Payments for S&A ExpensesOctoberNovemberDecemberPro FormaDataDecemberPro FormaDataSalary expensePrior month sales commissionsSupplies expensePrior month utilitiesDepreciation on store fixturesRentMiscellaneousTotal payments for S&A expensesg. Cash BudgetOctoberBeginning cash balanceAdd cash receiptsCash availableLess paymentsFor inventory purchasesFor S&A expensesPurchase of store fixturesInterest expenseTotal budgeted paymentsPayment minus receiptsSurplus (shortage)Financing activityBorrowing (repayment)Ending cash balanceh.HAAS COMPANYPro Forma Income StatementFor the Quarter Ended December 31, 2015Sales revenueCost of goods soldGross marginS&A expensesOperating incomeInterest expenseNet incomeNovemberStudent Name:Class:Problem 07-23Ai.HAAS COMPANYPro Forma Balance SheetDecember 31, 2015AssetsCashAccounts receivableInventoryStore fixturesAccumulated depreciationBook value of fixturesTotal assetsLiabilitiesAccounts payableUtilities payableSales commissions payableLine of credit liabilityEquityRetained earningsTotal liabilities and equityj.HAAS COMPANYPro Forma Statement of Cash FlowsFor the Quarter Ended December 31, 2015Cash flows from operating activitiesCash receipts from customersCash payments for inventoryCash payments for S&A expensesCash payments for interest expenseNet cash flows from operating activitiesCash flows from investing activitiesCash payment for store fixturesCash flows from financing activitiesNet inflow from line of creditNet increase in cashPlus: Beginning cash balanceEnding cash balanceGiven Data P07-23A:HAAS COMPANYPart a.October salesSales in cashSales in accounts receivableExpected sales growth per monthPart b.Accounts receivable collected inmonth following salesPart c.Cost of goods sold as percentageof salesEnding inventory – percent of nextmonth’s cost of goods soldDecember estimated ending inventoryPart d.Accounts payable paid in monthof purchaseAccounts payable paid in monthfollowing purchasePart e.Salary expense (fixed)Sales commissions (percent of sales)Supplies expense (percent of sales)Utilities (fixed)Depreciation on store equipment (fixed)Rent (fixed)Miscellaneous (fixed)Cost of store fixturesSalvage value – store fixturesUseful life (years) – store fixturesPart g.Borrowing incrementsMonthly interest rateCash cushion$250,00040%60%8%100%60%$10%12,00070%30%$$18,0005%2%1,4004,0004,8001,200164,00020,0003$$1,0001%12,000


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