1. The president of Univax, Inc. has just approached the company's bank seeking short-term financing for the coming year, Year 2. Univax is a distributor of commercial vacuum cleaners. The bank has stated that the loan request must be accompanied by a detailed cash budget that shows the quarters in which financing will be needed, as well as the amounts that will be needed and the quarters in which repayments can be made To provide this information for the bank, the president has directed that the following data be gathered from which a cash budget can be prepared a Budgeted sales and merchandise purchases for Year 2, as well as actual sales and purchases for the last quarter of Year 1, are as follows Merchandise Purchases Sales Year 1 Fourth quarter actual$440,000 Year 2 $340,000 First quarter estimated s540,000 $420,000 Second quarter estimated $640,000 $470,000 Third quarter estimated $740,000 $530,000 Fourth quarter estimated 620,000 $400,000 b. The company typically collects 53% of a quarter's sales before the quarter ends and another 45% in the C. Some 15% of a quarters merchandise purchases are paid for within the quarter. The remainder is paid d. Selling and administrative expenses for Year 2 are budgeted at S83.000 per quarter plus 8% of sales. Of e. The company will pay $13,000 in cash dividends each quarter following quarter. The remainder is uncolectible. This patern of collections is now being experienced in in the following quarter the fixed amount, $24,000 each quarter is depreciation the third quarter cash balance of at least $17,000 . Land purchases will be made as follows during the year $90.000 in the second quarter and $49.400 in g. The Cash account contained $19,000 at the end of Year 1. The company must maintain a minimum h. The company has an agreement with a local bank that allows the company to borrow in increments of $10,000 at the beginning of each quarter up to a total loan balance of 3100,000. The interest rate on these loans is 1%per month, and for simplicity, we will assume that interest is not compounded The company would, as far as it is able, repay the loan plus accumulated interest at the end of the year At present, the company has no loans outstanding Required: 1a. Prepare a schedule of expected cash collections on sales by quarter and in total for Year 2 (Leave no cells blank be certain to enter "O" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash Collections Year 2 Quarter Total Third Fourth Second First Year 1-Fourth quarter sales Year 2-First quarter sales Year 2 -Second quarter sales Year 2- Third quarter sales Year 2- Fourth quarter sales Total cash collections 1b. Prepare a schedule of expected cash disbursements for merchandise purchases, by quarter and in total for Year 2. (Leave no cells blank be certain to enter "O" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash DisbursementsMerchandise Purchases Year 2 Quarter econd Third Fourth Total Year 1 - Fourth quarter purchases Year 2-First quarter purchases Year 2-Second quarter purchases Year 2 Third quarter purchases Year 2 Fourth quarter purchases Total cash disbursements 2. Compute the expected cash disbursements for seling and administrative expenses, by quarter and in total, for Year 2. (Omit the "$" sign in your response.) Cash Disbursements First Seconds Third Fourth Year 3. Prepare a cash budget by quarter and in total for Year 2. (Input all amounts as positive values except cash deficiency, repayments and interest which should be indicated by a minus sign. Leave no cells blank- be certain to enter "O" wherever required. Omit the "$" sign in your response.) Inc. Cash Budget Year 2 QuarterFourth First Second Year Cash balance, beginning Add collections from sales Total cash available Less disbursements: Merchandise purchases Operating expenses Dividends Land Total disbursements Excess (deficiency) of receipts over disbursements Financing Borrowingt Repayments Interest Total financing Cash balance, ending
