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Merchandising Company Master Budget. Best Books, Inc., is a retail store that sells a variety of books in its retail and online stores. The company's fiscal year ends on December 31. Information to be used for the operating budget this coming year follows: Sales and Merchandise Purchases Budget Information Sales for this coming year, ending December 31, are expected to be as follows: First quarter $ 600,000 Second quarter $ 650,000 Third quarter $ 660,000 Fourth quarter $ 800,000 Cost of goods sold is 40 percent of sales (this is the first line of the merchandise purchases budget). Merchandise inventory is maintained at a level equal to 20 percent of the next quarter's cost of goods sold. Merchandise inventory at the end of the fourth quarter budget period is estimated to be $55,000. Selling and Administrative Budget Information Management estimates all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year are Salaries $ 150,000 Rent $ 25,000 Advertising $ 40,000 Depreciation $ 18,000 Other $ 12,000 Capital Expenditure and Cash Budget Information The company plans to pay cash for property, plant, and equipment totaling $35,000 at the end of the fourth quarter. This purchase will not affect depreciation expense for the coming year. The company expects to collect 70 percent of sales in the quarter of sale and 30 percent in the quarter following the sale. Accounts receivable at the end of last year totaled $200,000, all of which will be collected during the first quarter of this coming year. All inventory purchases are on credit. The company expects to pay 80 percent of inventory purchases in the quarter of purchase and 20 percent in the following quarter. Accounts payable at the end of last year totaled $68,000, all of which will be paid during the first quarter of this coming year. The cash balance at the beginning of this coming year is expected to be $90,000

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