Assignment
The following is available for the Newport Stationery Store:
Balance Sheet Information for September 30, 2016:
|
Current Assets
|
|
|
Cash
|
$12,000
|
|
Accounts Receivable
|
10,000
|
|
Inventory
|
63,600
|
|
Equipment (net)
|
100,000
|
|
Liabilities
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0
|
|
Recent and Anticipated Sales
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|
|
September
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$40,000
|
|
October
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48,000
|
|
November
|
60,000
|
|
December
|
80,000
|
|
January
|
36,000
|
Sales:
Sales are for cash (75%) and credit (25%). Assume that all credit sales are collected within 30 days of sale. All accounts receivable on September 30 are from September sales.
Operating Costs:
Rent, $750; Salaries and wages average 15% of monthly sales; other operating expenses excluding depreciation, 4%; Depreciation is $1000 per month. Assume all expenditures are paid each month.
Purchases:
Newport maintains an ending merchandise inventory each month equal to next month's sales plus $30,000. Terms on purchases are 2/10, n/30. Newport takes all discounts and treats these discounts as other income on the income statement. Gross margin averages 30% of sales.
Cash Balances:
Newport must maintain a minimum cash balance of $8,000. Assume all borrowing is made on the 1st of the month and repaid at the end of the month when funds are available. Loans are made in increments of $1000 and management does not want to borrow any more than necessary. The interest rate is 6% and is repaid when funds are available.
Other Information:
Newport is replacing some store fixtures and is planning on spending $600 in October and $400 in November. Newport is capitalizing these expenditures.
Required:
1. Complete the budget schedules for Newport.
2. Prepare a budgeted income statement and balance sheet for the 4th quarter 2016.