Question

Budgeted Financial Statements; Retailer

Village Hardware is a retail hardware store. Information about the store's operations follows.
-Nov 20X4 sales amounted to $400,000
-Sales are budgeted at $440,000 for Dec 20X4 and $400,000 for Jan 20X5
-Collections are expected to be 60 percent in the month of sale and 38 percent in the month following the sale. Two percent of sales are expected to be uncollecible.Bad debts expense is recognized monthly.
-The store's gross margin is 25 percent of its sales revenue.
-A total of 80 percent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 percent is purchased in the month of sale. Paumentfor merchandise is made in the month following the purchase.
-Other monthly expenses paid in cash anount to $45,200
-Annual depreciation is 432,000

The company's balnce sheet as of Nov 30, 20X4 is as follows

Cash….44,000
Accts receivable (net of $7,000 allowance for uncollectible accts)..152,000
Inventory……280,000
Property, plant, and equipment (net of 1,800,000 accumulated depreciation)1,724,000
total assets..$2,200,000
Accts payable…$324,000
Common stock…..1,590,000
Retained earnings…286,000
Total liabilities and stockholder's equity…$2,200,000

Required: Compute the following amounts.

1. The budgeted cash collections for Dec 20X4
2. The budgeted income (loss)before income taxes for Dec 20X4
3. The projected balance in accts payable on Dec 31, 20X4

Please show work.

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