28 2) Sche ACC 321 Group Project (chapter 6) for a Merchandising ompany 3) 1 Retained Earnings ....*** * June ....... July Nordic Company, a merchandising company, pre- pares its master budgme un quarterly basis. The following data have been assembled to assist in preparation of the master budget for the second quarter. 2. As of March 31 (the end of the prior quarter), the company's balance sheet showed the following account balances: Cash .................... $ 9,000 Accounts Receivable .......... 48,000 Inventory .................. 12,600 Plant and Equipment (net) ...... 214,100 Accounts Payable ........ $ 18,300 Capital Stock ...... 190,000 75,400 $283,700 $283,700 b. Actual sales for March and budgeted sales for April-July are as follows: March (actual) . . . . . . $60,000 April .... 70,000 May ........ 85,000 90,000 50,000 c. Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following sale. The accounts receivable at March 31 are a result of March credit sales. d. The company's gross profit rate is 40% of sales. Monthly expenses are budgeted as follows: salaries and wages, $7,500 per month; ship- ping, 6% of sales; advertising, $6,000 per month; depreciation, $2,000 per month; other expense, 4% of sales. At the end of each month, inventory is to be on hand equal to 30% of the following month's sales needs, stated at cost. Half of a month's inventory purchases are paid for in the month of purchase and half in the following month. Equipment purchases during the quarter will be as follows: April, $11,500; and May, $3,000. Dividends totaling $3,500 will be declared and paid in June. The company must maintain a minimum cash balance of $8,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of a month. Borrowings and repayments of principal must be in multiples of $1,000. Interest is paid only at the time of repayment of principal. The annual interest rate is 12%. (Figure interest on whole months, c.g., V1, 712) Using the data above, complete the following statements and schedules for the second quarter: 1) Sales Budget for the 210 Quarter: April May June Total Cash ales ....... $14,000 - Credit sales .. .................. 56,000 Total Budgeted Sales 70.000 2) Schedule of expected cash collections: May June Total Cash sales .. Credit sales ...... Total collections .................. April $14,000 48,000 3) Inventory purchases budget: April June Total May $51,000 Badgeted cost of goods sold ............. Add: Desired ending inventory ........... Total needs.......... Deduct: Opening inventory ............. Required purchases... .......... 57,300 12,600 $44,700 *For April ules: 573,000 sales X 60% cost ratio = $42,000. *$51,000 X 30% = $15,300. June Total 4) Schedule of cash disbursements for purchases: April For March purchases.................. $18,300 For April purchases ................. 22,350 For May purchases .......... For June purchases .......... Total cash disbursements .... May $22,350 $18,300 44,700 540,650