. $12,650 The Chippewa Chocolates (CC) Company began business on January 14, 2020. After its first year of operation, CC's president, Allen Hale, is now trying to prepare the company's master budget for the first two months (January and February) of 2021. Since you are his good friend and an accounting student, Mr. Hale has asked you to prepare the budget. Based on the budgets from 2020, Mr. Hale has gathered the following information: Projected Sales for January 2021 $128,000 Average Monthly Sales Increase 5% Average Monthly Salary Expenses $ 33.400 Average Monthly Rent Expenses $ 6,900 Average Monthly Utility Expenses $ 5,870 Average Monthly Misc. Expense Supplies Expense-percent of sales 2% Commission-percent of sales 6% Begin your project by carefully reading all instructions given here and reviewing the balance sheets and budget worksheets contained in the Excel workbook Fill in the data table in the upper left hand corner of the "Budgets worksheet (found on the second tab in the Excel workbook) with the values above and other values found in the assumptions given below. Using this information, prepare Chippewa Chocolates' master budget for the first two months of 2021. All amounts should be rounded to whole dollars as necessary. Apply the following assumptions: a) Customers typically pay 35% of total sales in cash and put the remaining 65% on account. The company expects to collect 100% of the credit sales in the month following the sale. b) The cost of goods sold is 40% of budgeted sales and the company desires to maintain a minimum ending inventory equal to 15% of the next month's cost of goods sold. All purchases are made on account c) The company pays 80% of inventory purchases in the month of purchase and the remaining 20% in the following month. d) Depreciation expense on existing equipment is $6,300 each month. In addition, CC will spend $160,000 on January 1 for additional equipment. The equipment is expected to have a $4,000 salvage value and a five-year (60 month) useful life. c) Salaries, utilities, and sales commissions are paid the month after they are incurred, all other expenses are paid in the month in which they are incurred The company borrows and repays funds on its credit line in increments of $1,000 on the last day of cach month as necessary to maintain its targeted $35,000 cash balance. It pays interest of 3% per month in cash on the last day of the month on cash borrowed in the prior month CHIPPEWA CHOCOLATES Selling and Administrative Expenses Budget For the Two Months Ending February 28, 2021 January February Variable costs: Total variable costs Fixed costs: Total fixed costs: Total S & A Expense 2 Budget Information: 3 Projected sales for January, 2021 4 Average Monthly percantage of sales increase: 5 Average monthly salary expense: 6 Average monthly rent expense: 7 Average monthly utility expense: 8 Average monthly misc, expense: 9 Supplies expense as a percentage of sales: 10 Commission expense as a percentage of sales: 11 Cash sales in month of sale 12 Cost of goods sold percentage of sales 13 Desired ending inventory-percent of next months COGS 14 Payments of inventory in month of purchase 15 Monthly depreciation for 2020 16 New equipment cost 17 Salvage value 18 Useful Life (months) 19 Minimum required cash balance 20 Monthly interest rate 21 22 CHIPPEWA CHOCOLATES 23 Sales Budget 24 For the Three Months Ending March 31, 2021 25 26 January February 27 Cash Sales 28 Credit Sales 29 Total Sales 30 31 32 CHIPPEWA CHOCOLATES 33 Schedule of Cash Receipts 34 For the Two Months Ending February 28, 2021 35 January February 37 Cash Sales CHIPPEWA CHOCOLATES Schedule of Cash Payments for S&A Expenses For the Two months Ending February 28, 2021 January February March Variable costs: Total variable costs Fixed costs: 36 Total fixed costs Cash paid for S&A Expenses Balancse Sheets Budgets CHIPPEWA CHOCOLATES Selling and Administrative Expenses Budget For the Two Months Ending February 28, 2021 January February Variable costs: Total variable costs Fixed costs: Total fixed costs: Total S & A Expense 2 Budget information: 3. Projected sales for January, 2021 4 Average Monthly percantage of sales increase: 5 Average monthly salary expense: 6. Average monthly rent expense: 7 Average monthly utility expense: 8 Average monthly misc, expense: 9 Supplies expense as a percentage of sales: 10 Commission expense as a percentage of sales: 11 Cash sales in month of sale 12 Cost of goods sold-percentage of sales 13. Desired ending inventory percent of next months COGS 14 Payments of inventory in month of purchase 15 Monthly depreciation for 2020 16 New equipment cost 17 Salvage value 18 Useful Life (months) 19. Minimum required cash balance 20 Monthly interest rate 21 22 CHIPPEWA CHOCOLATES 23 Sales Budget 24 For the Three Months Ending March 31, 2021 25 26 January February 27 Cash Sales 28 Credit Sales 29 Total Sales 30 31 32 CHIPPEWA CHOCOLATES 33 Schedule of Cash Receipts 34 For the Two Months Ending February 28, 2021 35 36 January February 37 Cash Sales CHIPPEWA CHOCOLATES Schedule of Cash Payments for S&A Expenses For the Two Months Ending February 28, 2021 January February March Variable costs: Total variable costs Fixed costs: Total fixed costs Cash paid for S&A Expenses Balancse Sheets Budgets D E G H A For the Two Months Ending February 28, 2021 44 45 46 January February F Sales Revenue Less: Gross Profit Less: 5&A Expenses Income before interest 47 Cost of Goods Sold 48 Add: Interest expense Net Income CHIPPEWA CHOCOLATES Cash Budget For the Two Months Ending February 28, 2021 January February Beginning Cash Balance Add: Cash Available Less: Cash Paid for: 49 Inventory Needed 50 Less 51 Budgeted Purchases 52 53 54 CHIPPEWA CHOCOLATES 55 Schedule of Cash Payments 56 For the Two months Ending February 28, 2021 57 58 January February 59 December Purchases 60 61 62 Cash paid for inventory 63 64 65 66 67 6B 69 70 71 72 73 74 75 76 Equipment purchase Interest Total Cash Paid Surplus/(Shortage) Borrowing Repayment Ending Cash Balance CHIPPEWA CHOCOLATES Schedule of Cash Payments for S&A Expenses For the Two Months Ending February 28, 2021 January February March Variable costs: Total variable costs Fixed costs: 21 22 CHIPPEWA CHOCOLATES 23 Sales Budget 24 For the Three Months Ending March 31, 2021 25 26 January February 27 Cash Sales 28 Credit Sales 29 Total Sales 30 31 32 CHIPPEWA CHOCOLATES 33 Schedule of Cash Receipts 34 For the Two Months Ending February 28, 2021 35 36 January February 37 Cash Sales 38 Collection of Credit Sales (A/R) 39 Total Budgeted Cash Receipts 40 41 42 CHIPPEWA CHOCOLATES 43 Inventory Purchases Budget 44 For the Two Months Ending February 28, 2021 45 46 January February 47 Cost of Goods Sold 48 Add: Total fixed costs Cash paid for S&A Expenses CHIPPEWA CHOCOLATES dgeted Income Statement For the Two Months Ending February 28, 2021 January February Sales Revenue Less: Gross Profit Less: S&A Expenses Income before interest Interest expense Net Income 49 Inventory Needed 50 Less: 51 Budgeted Purchases 52 CHIPPEWA CHOCOLATES CHIPPEWA CHOCOLATES Cash Budget Balancse Sheets Budgets 2 Chippewa Chocolates Company Balance Sheet December 31, 2020 4 5 Assets $ S 35,850 78,000 7.680 Liabilities Accounts Payable Inventory Salaries Payable Utilities Payable Commissions Payable Notes Payable Total Liabilities 9,696 31,500 6,480 7,200 $ 400,000 75,600 324,400 54,875 $ 445 930 Stockholder's Equity Common Stock Retained Earnings Total abilities & Stock Equity 300.000 91,054 445.930 $ 7 Cash 8 Accounts Receivable 9 Inventory 10 Equipment 11 Less: Accum. Depr. 12 13 Total Assets 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Cash 28 Accounts Receivable 29 Inventory 30. Equipment 31 Less: Accum, Depr. 32 33 Total Assets 34 35 36 37 38 39 40 41 Chippewa Chocolates Company Balance Sheet February 28, 2021 Assets Liabilities Accounts Payable Inventory Salaries payable Utilities Payable Commissions Payable Notes Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Liabilities & Stock Equity Variance check 44 45 Balancse Sheets Budgets