Reference no: EM132598466
Kama Bay Outfitters is a retail fishing supply store that uses accrual accounting for its records. Information on the store operations is as follows:
1) The store has budgeted sales at $220,000 for January and $200,000 for February. Given CoVid, their sales are usually much higher.
2) It expects collections to be 60% in the month of sale and 38% in the month following the sale. It expects 2% of sales to be uncollectible.
3) Gross margin is 25% of sales.
4) It purchases a total of 80% of the merchandise for resale in the month before the month of sale and 20% in the month of sale. It makes payments for merchandise in the month after it purchases it.
5) Other expected monthly expenses to be paid in cash amount to $22,600.
6) Annual depreciation is $216,000. The store balance sheet at the close of business on December 31 follows:
Assets
Cash- $44,000
Accounts receivable (net of $4,000 allowance for uncollectible accounts) - 152,000
Inventory - 264,000
Property and equipment (net of $680,000 of accumulated depriciation)- 1740,000
Total ASSETS = $2,200,000
Liabilities and shareholder's Equity
Accounts payable - $324,000
Common share - 1600,000
Retained earning - 276,000
Total liabilities and shareholder's equity - $2,200,000
Question a. budgeted income statement for January 2021.
Question b. cash budget for January 2020.
Question c. budgeted balance sheet as of January 31, 2020.