Everywhere Sports is a retail store in Parramatta supplying sporting equipment to the local community sports clubs. Information about the store’s operations is as follows: November sales amounted to $200 000. Sales are budgeted at $220 000 for December and $200 000 for January. Receipts are expected to be 60 per cent in the month of sale and 38 per cent in the month following the sale. Two per cent of sales are expected to be uncollectable. The store’s gross margin is 25 per cent of its sales revenue. A total of 80 per cent of the merchandise for resale is purchased in the month prior to the month of sale, and 20 per cent 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 $22 600. Annual depreciation is $216 000. The balance sheet of Everywhere Sports as at 30 November is: Everywhere Sports Balance Sheet 30 November Assets: Cash $22 000 Accounts receivable (net of $3 500 allowance for uncollectable accounts) 76 000 Inventory 140 000 Property, plant and equipment (net of $590 000 accumulated depreciation) 862 000 Total assets $1 100 000 Liabilities and shareholders’ equity: Accounts payable $ 162 000 Ordinary shares 795 000 Retained earnings 143 000 Total liabilities and shareholders’ equity $1 100 000 Required: 1. Prepare schedule of budgeted cash receipts for December. 3 marks 2. Prepare budgeted profit and loss statement for December. 6 marks 3. Calculate the projected balance in accounts payable on 31 December. 3 marks
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