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Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010.

Actual and forecasted sales for selected months in 2010 are as follows:

Cash dividends of $17,000 are declared during the third month of each quarter and are paid during the first month of the following quarter. Operating expenses, except insurance, rent, and depreciation are paid as incurred. Rent is paid during the following month. The prepaid insurance is for five more months. Cost of goods sold is equal to 50 percent of sales. Ending inventories are sufficient for 120 percent of the next month's sales. Purchases during any given month are paid in full during the following month. All sales are on account, with 50 percent collected during the month of sale, 40 percent during the next month, and 10 percent during the month thereafter. Money can be borrowed and repaid in multiples of $1,000 at an interest rate of 12 percent per year. The company desires a minimum cash balance of $2,000 on the first of each month. At the time the principal is repaid, interest is paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.

cash receipts schedule for each month of the second quarter ending June 30, 2010. Do not include borrowings.

For April, May, June and Total

QUESTION 5 Partially correct Mark 19.90 out of 30.00 Flag question Developing a Master Budget for a Merchandising Organization Peyton Department Store prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for 2010 PEYTON DEPARTMENT STORE Balance Sheet March 31, 2010 Liabilities and Stockholders' Equity $26,000 17,000 1,000 40,000 Assets Cash Accounts receivable Inventory Prepaid Insurance Fixtures Total assets $2,000 Accounts payable 25,000 0,000 Rent payable 2,000 Stockholders' equity 25,000 Dividends payable $84,000 Total liabilities and equity $84,000

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