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Bernard Creighton is the controller for Creighton Hardware Store. In putting
together the
the following data.
a. Sales
July (Actual) $100.000
August (Actual) 120.000
September (Estimated) 90.000
October (Estimated) 100.000
November (Estimated) 135.000
December (Estimated) 150.000
b. Each month, 20 percent of sales are for cash, and 80 percent are on
credit. The collection pattern for credit sales is 20 percent in the month
of sale, 50 percent in the following month, and 30 percent in the second
month following the sale.
c. Each month, the ending inventory exactly equals 40 percent of the cost
of next month's sales. The markup on goods is 33.33 percent of cost.
d. Inventory purchases are paid for in the month following purchase.
e. Recurring monthly expenses are as follows:
Salaries & Wages $10.000
Utilities 1.000
Other 1.700
f. Property taxes of $15,000 are due and payable on September 15.
g. Advertising fees of $6,000 must be paid on October 20.
h. A lease on a new storage facility is scheduled to begin on November 2.
Monthly payments are $5,000.
i. The company has a policy to maintain a minimum cash balance of
$10,000. If necessary, it will borrow to meet its short-term needs. All
borrowing is done at the beginning of the month. All payments on
principal and interest are made at the end of the month. The annual
interest rate is 9 percent. The company must borrow in multiples of
$1,000.
j. A completed
(Accounts payable is for inventory purchases only.)
Assets Liabilities&Owners' Equity
Cash $10.200
Inventory $27.000
Plant & Equipment $ 431.750
Account Payable $ 81.000
Common Stocks $ 220.000
Total $569.750 $569.750
Required:
1). Prepare a pro forma balance sheet as of November 30.
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