Eurofit cycling a bike shop had the following net income

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Reference no: EM13951941

In the fourth quarter of 2011, Eurofit Cycling, a bike shop, had the following net income:

Sales .................$350,000
Less cost of sales ............$140,000
Gross margin ..............$210,000
Selling and administration .........$65,000
Income before taxes ............$145,000
Income taxes ..............$50,750
Net income ..............$ 94,250
Purchases in the fourth quarter amounted to $180,000.
Estimated data for Eurofit Cycling for 2012 are as follows:

1283_259-B-M-A-B-P-C (1176).png

Taxes are 35 percent of pretax income. Fifty percent of sales are collected in the quarter of sale and 50 percent are collected in the next quarter. Eighty percent of purchases are paid in the quarter of purchase and 20 percent are paid in the next quarter. Selling and administrative expenses are paid in the quarter incurred except for $7,000 of depreciation included in selling and administrative expense. A capital expenditure for $20,000 is planned for the fourth quarter of 2012.

Required:

Prepare a cash budget for each quarter of 2012. 

Reference no: EM13951941

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