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Case Intro Q1 Q2 Q3 Q4 Q5 Q6 Question 5 - Cash Budget (30 marks) Mountain Sports has aquired an open line of credit up to a maximum of $350.000. It will be necessary to convince the bank manager of this new Canmore branch ability to repay its line of credit including any interest. Management has provided the following list of assumptions to help in the preparation of the cash budget (note: you will need to use the projected income statement provided in Question 4 to complete the cash budget): 1. Beginning cash balance invested by owners 52,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2. Sales by quarter (as % of total projected sales) 2296 27% 26% 25% 3. Type of collections from customers: Cash Sales Credit Sales (accounts receivable) 35% 65% Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale 4. Merchandise purchases Merchandise purchases (cost of goods sold) are all paid in the quarter following purchase. (Quarter I purchases are bought in Quarter 1 but paid for in quarter 2). 5. Operating expenses All other operating expenses (all expenses except cost of goods sold) are paid on a monthly basis. 6. Required investment in equipment paid in cash in the first quarter 135,000 7.000 7. Quarterly income tax payments paid in cash 8. Minimum cash balance 22.000 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and saments are made in increments of $1.000. Interest en borrowing can be ignored. Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made, as requested by the company's bank. Mountain Sports Cash Budget For the year ended December 31 orter Year Summary Percent of Sales Estimated Sales CASH BALANCE. Beginning $2.000 Collections from east Cash Sales Credit Sales o CASH AVAILABLE Les Cash Payments Merchandise purchases (COGS) Sales Commissions Advertising Property Taxes Rent Salaries & Wages Equipment Purchase Income tax Installment Total Disbursements Cash Excess (Deficiency) Financing (Note 1) Borrow Repayment of Principal (show as negative) Net Financing Cash Balance, Ending Note 1: Financing Calculations Cash excess Deficiency Minimum cash balance Amount to borrow (repayl Borrowing (Repayments) Rounded to increment of $1,000 File Home Insert Formulas Data Review View Help Open in Desktop App 9 Calibri V 11 V B I vv Av y v ele Merg 45 3 D E Question 5 - Cash Budget (30 marks) Mountain Sports has aquired an open line of credit up to a maximum of $350,000. It will be necessary to convince the bank manager of this new Canmore branch ability to repay its line of credit including any interest. Management has provided the following list of assumptions to help in the preparation of the cash budget (note: you will need to use the projected income statement provided in Question 4 to complete the cash budget): 4 5 6 1. Beginning cash balance invested by owners $ 52,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 22% 2796 26% 25% 8 2. Sales by quarter (as % of total projected sales) 9 10 113. Type of collections from customers: 12 Cash Sales 35% 13 Credit Sales (accounts receivable) 65% 14 15 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 27% Quarter 1 Quarter 2 2. Sales by quarter (as % of total projected sales) Quarter 3 Quarter 4 9 2296 10 26% 25% 11 3. Type of collections from customers: 12 Cash Sales 35% 13 Credit Sales (accounts receivable) 65% 15 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 16 12 4. Merchandise purchases Merchandise purchases (cost of goods sold) are all paid in the quarter following purchase. (Quarter 1 purchases are 18 bought in Quarter 1 but paid for in quarter 2). 19 205. Operating expenses 21 All other operating expenses (all expenses except cost of goods sold) are paid on a monthly basis. 22 6. Required investment in equipment paid in cash in the first quarter 23 $ 135,000 24 25 7. Quarterly income tax payments paid in cash $ 7,000 26 27 8. Minimum cash balance $ 22,000 28 299. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000, Interest on borrowing can be ignored. 30 31 Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments Aupe Garn Inten 1 2 OS 06 Calibri av Av. vab 5 B C E FA 8. Minimum cash balance F $ 22,000 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made, as requested by the company's bank. Mountain Sports Cash Budget For the year ended December 31 Quarter 2 Year Summary 1 3 4 Percent of Sales Estimated Sales 3 9 CASH BALANCE, Beginning $ 52,000 Mountain Sports Cash Budget For the year ended December 31 33 Quarter Year Summary 4 Note from 35 36 Percent of sales 37 Estimated sales 38 Total sales Remember Cashbudge Canmore e 4. This will distreme 39 CASH BALANCE, Beginning 5 52,000 49 Collections from customers Cash sales Credit Sales 43 CASM AVAILABLE 44 LES Cash Payments 45 Merchandise purchases (COGS 46 Sales Commissions Property Taxe 15 Rent 30 Salaries & WAR Equipment Purchase 51 52 Income tax installment 53 Total Disbursements 54 Cashes (Decency 55 and Note 3 56 LOS Repayment of Principal show as 59 Cash Balance, Ending 60 61 Note Financing Calculations 1 Cash excess cancy 61 Minimum can be Amount to borrow repayl Borrowing the payments) Hounded to 5 Increment of $1.000 60 Case Intro 01 Q2 Q3 Q4 OS Q6 + Workbook Statistics Calculation Mode: Automatic Tyne here to search The investment in assets (cash, inventory, equipment) required for the new location is Minimum required return on investments Actual 2019 return on investment of the original location Management has provided the following income statement to the bank manager the expected net i next year. Static Budget % Amount Sales in Units 4,008 Sales 501,000 100% Less: Variable Costs: Cost of Goods Sold 217,000 43% Sales Commissions 75,150 15% Total Variable Costs 292,150 58% Contribution Margin 208,850 42% Less: Fixed Costs: Advertising 20,000 Property Taxes 9,000 Rent 54,000 Salaries & Wages 108,000 Total Fixed Costs 191,000 Net Operating Income 17.850 Part A: (4 marks) Calculate the following performance measurements for the proposed Can Question 5 - Cash Budget (30 marks) Mountain Sports has aquired an open line of credit up to a maximum of $350,000. It will be necessary to convince the bank manager of this new Canmore branch ability to repay its line of credit including any interest Management has provided the following list of assumptions to help in the preparation of the cash budget (note: you will need to use the projected income statement provided in Question 4 to complete the cash budget): 1. Beginning cash balance invested by owners 52,000 Quarter 1 Quarter 2 Quarter 3 Quarter 4 2. Sales by quarter (as % of total projected sales) 22% 27% 26% 25% 3596 3. Type of collections from customers: Cash Sales Credit Sales (accounts receivable) 65% Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 4. Merchandise purchases Merchandise purchases (cost of goods sold) are all paid in the quarter following purchase. (Quarter I purchases are bought in Quarter I but paid for in quarter 2) 5. Operating expenses All other operating expenses (all expenses except cost of goods sold) are paid on a monthly basis. 6. Required investment in equipment paid in cash in the first quarter 135,000 7,000 7. Quarterly income tax payments paid in cash 8. Minimum cash balance 22,000 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1.000. Interest on borrowing can be ignored. 9. Barrening and Repayments Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All batang payments are made in increments of S1000. Interest on borrowing can be ignored Required. Prepare a cash budget for the first year of operation in Cancer by quarter and in total Show clearly on year budget the quarters) in which borrowing will be needed and the quarter(s) in which repayments can be made, as requested by the company's bank Mountain Sports Cash Budget For the year ended December 31 Quarter Smar Percent of Sales Estimated Sales 52.000 CASH BALANCE. Beginning Collections from customers Cash Sales Credit Sales CASH AVAILABLE Less: Cash Payments Merchandise purchases (Cois) Sales Comics Advertising Property Taxes Rent Salaries & Wages Equipment Purchase Income tax Installment Total Disbursements Cash Excess (Deficiency) Financing (Note 1) Borrow Repayment of Principal (show as negative) Net Financing Cash Balance, Ending Note 1: Financing Calculations Cash excess Deficies Minimum cash balance Amount to borrow free! Borrowing (Repayments) Rounded to increment of 1,000