Problem 14-23 Preparing a master budget for retail company withno beginning account balances LO 14-2, 14-3, 14-4, 14-5, 14-6 [Thefollowing information applies to the questions displayed below.]Rooney Company is a retail company that specializes in sellingoutdoor camping equipment. The company is considering opening a newstore on October 1, 2019. The company president formed a planningcommittee to prepare a master budget for the first three months ofoperation. As budget coordinator, you have been assigned thefollowing tasks: Problem 14-23 Part 1 Required October sales areestimated to be $240,000, of which 40 percent will be cash and 60percent will be credit. The company expects sales to increase atthe rate of 25 percent per month. Prepare a sales budget. Thecompany expects to collect 100 percent of the accounts receivablegenerated by credit sales in the month following the sale. Preparea schedule of cash receipts. The cost of goods sold is 60 percentof sales. The company desires to maintain a minimum endinginventory equal to 10 percent of the next month’s cost of goodssold. However, ending inventory of December is expected to be$13,200. Assume that all purchases are made on account. Prepare aninventory purchases budget. The company pays 70 percent of accountspayable in the month of purchase and the remaining 30 percent inthe following month. Prepare a cash payments budget for inventorypurchases. Budgeted selling and administrative expenses per monthfollow: Salary expense (fixed) $ 19,200 Sales commissions 5 % ofSales Supplies expense 2 % of Sales Utilities (fixed) $ 2,600Depreciation on store fixtures (fixed)* $ 5,200 Rent (fixed) $6,000 Miscellaneous (fixed) $ 2,400 *The capital expendituresbudget indicates that Rooney will spend $219,200 on October 1 forstore fixtures, which are expected to have a $32,000 salvage valueand a three-year (36-month) useful life. Use this information toprepare a selling and administrative expenses budget. Utilities andsales commissions are paid the month after they are incurred; allother expenses are paid in the month in which they are incurred.Prepare a cash payments budget for selling and administrativeexpenses. Rooney borrows funds, in increments of $1,000, and repaysthem on the last day of the month. Repayments may be made in anyamount available. The company also pays its vendors on the last dayof the month. It pays interest of 1 percent per month in cash onthe last day of the month. To be prudent, the company desires tomaintain a $24,000 cash cushion. Prepare a cash budget.