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Case 10.59 Sports Fanatic Company is a retail sporting goods store that uses accrual accounting...

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Accounting

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Case 10.59 Sports Fanatic Company is a retail sporting goods store that uses accrual accounting for its records. Information on Sports Fanatic's operations is as follows: 1. 2. 3. 4. The store has budgeted sales at $220,000 for January and $200,000 for February. 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. Gross margin is 25% of sales. 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. Other expected monthly expenses to be paid in cash amount to $22,600. Annual depreciation is $216,000. Sports Fanatic's balance sheet at the close of business on December 31 follows. 5. 7. SPORTS FANATIC COMPANY Cash Budget For the Month of January Beginning Cash Balance 22000 Add : Cash Receipts Collections from January 132000 Accounts Receivable-from December 76000 Total Cash Receipts 230000 Total Disbursements Ending Cash Balance

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