0 CRAVAT SALES COMPANY $12,000 8.10 Minimum ending cash balance Selling price (per unit) Recent and forecast sales [in units] January (actual) February (actual) March (actual) April 20,000 24,000 28,000 33,000 41,000 65,000 40,000 36,000 32,000 July September Desired ending inventories (percentage 75% of next month's sales] Cost of ties (per unit) 4.85 Purchases paid as follows In month of purchase In following 50% 50% Collection on sales Sales collected current month Sales collected following month Sales collected 2nd month following 30% 60% 10% Variable monthly expenses Sales commissions( per tie 1.00 Fixed monthly expenses $22,000 $14,000 $1,200 1,500 $3,000 Wages and salaries Insurance Depreciation Miscellaneous Land purchased in May Dividends declared each quarter $30,000 $12,000 Balance sheet at March 31 dssefs Cash Accounts receivable $14,000 $19,440 158,760 February sales March sales Inventory (24,750 units) Prepaid insurance Fixed assets, net of depreciation Total assets 178,200 120,037.50 14,400 172,700 $499,337.50 Liabiliies and Slockhoides'Equsf* Accounts payable Dividends payable Capital stock Retained earnings Total liabilities and stockholders' equity $ 76,993.75 12,000 300,000 110,343.75 $499.337.50 Agreement with Bank: Borrowing increments Maximum borrowing amount Interest rate per month Repayment increments Total of interest paid each quarter Required minimum cash balance $1,000 $300,000 $1,000 $12,000 1% 100% 5 7 CRAVAT SALES COMPANY Budge Quarter June ri 1a. Sales budget: Budgeted sales in units 00139,000 41,000 33,000 65,000 1 Selling price per unit 8.10 $ 8.10 $ Total sales $267,300 $ 332,100 $ 526,500 $ 1,125,900 Correct! Correct! Correct! Correct! 1b. Schedule of expected cash collections February sales March sales April sales May sales June sales Total cash collections S 19,440 136,080 80,190 S 19,440 S 158,760 160,380 $ 26,730 S 267,300 199,260S 298,890 157,950 S 157,950 $235,710 $ 282,690 $ 383,940 $ 902,340 22,680 99,630 Correct! Correct! Correct! Correct! 1c. Merchandise purchases budget: 00 139,000 109,500 248,500 104,250 144,250 33,000 30,750 63,750 24,750 39,000 41,000 48,750 89,750 30,750 59,000 Budgeted sales in units 30,000 95,000 4 Add budgeted ending inventory , |Total needs 48,750 46,250 Less beginning inventory 7 Required unit purchases 4.85 $ Unit cost Required dollar purchases $189,150.00 $286,150.00 $ 224,312.50 $ 699,612.50 Correct! Correct! Correct! Correct! 1d. Budgeted cash disbursements for inventory purchases March purchases April purchases May purchases $ 76,993.75 $76,994 $ 189,150 143,075 $ 143,075S 286,150 112.156.25 112.156.25 $171,568.75 $ 237,650 255,231.25 664,450.00 94,575 $ 94,575 5 June purchases 5 Total cash payments Correc Correc Correc Correc 39 2. CRAVAT SALES COMPANY Cash Budget For the Three Months Ending June 30 10 41 12 13 4 45 Cash balance, beginning 46 Add receipts from customers 7 Total cash available 48 Less disbursements: 9 Purchase of inventory 0 Sales commissions 1 Salaries and wages 52 Utilities 53 Miscellaneous 4 Dividends paid 55 Land purchases 56 Total disbursements 7 Excess [deficiency] of receipts 58 over disbursements 9 Financing: 50 Borrowings l Hepayments 52 Interest 53 Total financing 54 Cash balance, ending 35 April June Quarter 89 4 CRAYAT SALES COMPANY Budgeted Balance Sheet June 30 94 95 Cash 96 Accounts receivable 97Inventory 98 Unexpired insurance 99 Fixed assets, net of depreciation 100 Total assets Assets 102 103 Accounts payable, purchases 104 Dividends payable 105 Loans payable, bank 106 Capital stock, no par 107 Retained earnings 108 Total liabilities and equity fahilities and Stocthooers Egufte 110 Accounts receivable at June 30: 111 May sales 112 June sales 113 Total 114 115 Retained earnings at J 11 Balance, March 31 117 Add net income 118 Total 119 Less dividends declared 120 Balance, June 30 121 June 30