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1.

January budgeted selling and administrative expenses for the retail shoe store that Nadege Weib plans to open on January 1, 2014, are as follows: sales commissions, $22,000; rent, $16,500; utilities, $5,400; depreciation, $4,600; and miscellaneous, $1,700. Utilities are paid in the month after incurrence. Other expenses are expected to be paid in cash in the month in which they are incurred.

Required:

a.	Determine the amount of budgeted cash payments for January selling and administrative expenses.
	BUDGETED CASH PAYMENTS _________________________

b.	Determine the amount of utilities payable the store will report on the January 31st pro forma balance sheet.
	UTILITIES PAYABLE _______________________

c.	Determine the amount of depreciation expense the store will report on the income statement for the year 2014, assuming that monthly depreciation remains the same for the entire year.

DEPRECIATION EXPENSE ___________________________

2.

Daniel Singh, the controller of Meier Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow.

		First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Total
Sales revenue	$	181,000		$	211,000		$	221,000		$	271,000		$	884,000
Cost of goods sold		126,700			147,700			154,700			189,700			618,800
Gross profit		54,300			63,300			66,300			81,300			265,200
Selling & admin. expenses		18,100			21,100			22,100			27,100			88,400
Net income	$	36,200		$	42,200		$	44,200		$	54,200		$	176,800

Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue.

Joe Meier, the chief executive officer, told Mr. Singh that he expected sales next year to be 10 percent for each respective quarter above last years level. However, Ashley Odom, the vice president of sales, told Mr. Singh that she believed sales growth would be only 5 percent.

Required:

a.	Prepare a pro forma income statement including quarterly budgets for the coming year using Mr. Meiers estimate.

b.	Prepare a pro forma income statement including quarterly budgets for the coming year using Ms. Odoms estimate.

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