Accounting 1C Budgeting Project You are all members of the budget committee for YXL. The company has an exclusive right to sell Super Bottle and sales have been brisk. The budget committee has been given the responsibility to prepare a Master Budget for the next three months starting April 1. The following information is available related to the budget. The company needs to maintain a minimum cash balance at the end of every month in the amount of $15,000. The super power water bottles are forecasted to sell at $32 each. Recent actual and projected sales (in units) are as follows Jan Feb Mar Actual 65,000 78,000 91,000 Projected Apr 114,000 May 146,000 Jun 195,000 Projected Jul 130,000 Aug 117,000 Sep 104,000 In order to meet the product demand, the company has established a policy requiring that ending inventory for each month must be equal to 90% of the units expected to sold in the next month. The cost to purchase each unit of product is $19. Purchases are typically paid for as follows: 50% paid in the month of purchase, and the remaining 50% paid in the month after purchase. All sales are on credit, with no discount, and payable within 15 days. The company's collections on account usually are 25% in the month of sale, 50% in the month immediately after the sale, and 25% in the second month after sale. The company has a very rigorous credit policy and there are virtually no bad debts. The company's operating expenses are shown below: Variable: Sales Commissions Fixed: W ages Utilities Insurance expired Depreciation Miscellaneous $3 per unit $72,000 2,500 2,400 3,000 4,000 All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. New fixed assets will be purchased during May for $30,000. The company declares dividends of $16,000 each quarter, payable in the first month of the following quarter. YXL's Balance Sheet at March 31 is as follows. ASSETS Cash Accounts receivable* Inventory (102600 units)** Unexpired insurance Fixed assets (net of depreciation) Total Assets LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock, (no par) Retained Earnings Total Liabilities & Equity $23,000 2,808,000 1,949,400 28,800 193,600 $5,002,800 $1,061,150 16,000 400,000 3,525,650 $5,002,800 *Accounts receivable consists of $624,000 from February sales and $2,184,000 from March Sales. Use these numbers for all scenarios. ** Use this same March ending inventory number for all scenarios. The company has a good relationship with its bank and can borrow money at a 10% annual rate at any time and in any amount. All borrowing and repayments must be made at the end of the month. When the company is ready to make a payment, all unpaid interest must be paid first. After the unpaid interest is paid, then principal can be repaid as long as the minimum cash balance is maintained. Required: Prepare a Master Budget for the three month period ending June 30th. Include the following detailed budgets: 2. A cash budget by month and in total. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30.

Accounting 1C Budgeting Project You are all members of the budget committee for YXL The company has an exclusive right to sell Super Bottle and sales have been brisk. The budget committee has been given the responsibility to prepare a Master Budget for the next three months starting April 1. The following information is available related to the budget. The company needs to maintain a minimum cash balance at the end of every month in the amount of $15,000. The super power water bottles are forecasted to sell at $32 each. Recent actual and projected sales (in units) are as follows Projected Apr May Projected Jul Actual 130,000 117,000 104,000 Jan 65,000 78,000 91,000 114,000 146,000 195,000 Feb Aug Sep Mar Jun In order to meet the product demand, the company has established a policy requiring that ending inventory for each month must be equal to 90% of the units expected to sold in the next month. The cost to purchase each unit of product is $19. Purchases are typically paid for as follows: 50% paid in the month of purchase, and the remaining 50% paid in the month after purchase. All sales are on credit, with no discount, and payable within 15 days. The company's collections on account usually are 25% in the month of sale, 50% in the month immediately after the sale, and 25% in the second month after sale. The company has very rigorous credit policy and there are virtually no bad debts. The company's operating expenses are shown below: Variable: Sales Commissions $3 per unit Fixed: $72,000 2,500 2,400 3,000 4,000 Wages Utilities Insurance expired Depreciation Miscellaneous All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. New fixed assets will be purchased during May for $30,000. The company declares dividends of $16,000 each quarter, payable in the first month of the following quarter. YXL's Balance Sheet at March 31 is as follows. ASSETS $23,000 2,808,000 1,949,400 28,800 193,600 $5,002,800 Cash Accounts receivable* Inventory (102600 units)** Unexpired insurance Fixed assets (net of depreciation) Total Assets LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock, (no par) Retained Earnings $1,061,150 16,000 400,000 3,525,650 $5,002,800 Total Liabilities & Equity *Accounts receivable consists of $624,000 from February sales and $2,184,000 from March Sales. Use these numbers for all scenarios. ** Use this same March ending inventory number for all scenarios. The company has a good relationship with its bank and can borrow money at a 10% annual rate at any time and in any amount. All borrowing and repayments must be made at the end of the month. When the company is ready to make a payment, all unpaid interest must be paid first. After the unpaid interest is paid, then principal can be repaid as long as the minimum cash balance is maintained Required: Prepare a Master Budget for the three month period ending June 30th. Include the following detailed budgets: 1. a. A sales budget by month and in total b. A schedule of budgeted cash collections from sales and accounts receivable by month and in total c. A purchases budget in units and dollars by month and in total d. A schedule of budgeted cash payments for purchases by month and in total 2. A cash budget by month and in total. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. YXL Inc Budgeted Balance Statement June 30 201X Assets 15,000 Cash AR Inventory 117000 units at $19 2,223,000 Unexpired insurance Fixed assets, net Total Assets Liability& Equity AP Interest Payable Dividends payable Note payable-bank Capital Stock, no-par Retainrd Earings Total Liabilities & Equity YXL Inc. 15 16 Comparative Budget/Actual Balance Sheet-Horizontal Analysis June 30 and March 31, 201X Budget June 30 201X 7 8 Actual March 31 201X Percent Change 9 Cash Change 0 AR 1 Unexpired insurance 2 Fixed assets, net 23 Total Assets 4 25 AP 26 Interest Payable 27 Dividends payable 28 Notes payable-bank 29 Capital Stock, no-par 80 Reained Earnings 1 Total Liability & Equity 2 4 SENARIO 1 85 Balance Sheet detail: 6 AR 7 May Sales 8 June Sales 9 10 1 2 RE 3 Beg RE 4 Net income 5 Less Dividends declared 8 SCENARIO 9 Contribution Margin and BEP 0 1 Unit Sales price 2 Unit purchase price 3 Unit sales Commissions 4 Unit Contribution Margin 5 6 Fixed Costs for three month period 7 Wages 8 Utilities 9 Insurance expired 0 Depression 1 Miscellaneous 2 Total Fixed Costs 4 Break Even Point 5 Fixed Costs/Unit CM 6 Fixed Costs/CM% Accounting 1C Budgeting Project You are all members of the budget committee for YXL The company has an exclusive right to sell Super Bottle and sales have been brisk. The budget committee has been given the responsibility to prepare a Master Budget for the next three months starting April 1. The following information is available related to the budget. The company needs to maintain a minimum cash balance at the end of every month in the amount of $15,000. The super power water bottles are forecasted to sell at $32 each. Recent actual and projected sales (in units) are as follows Projected Apr May Projected Jul Actual 130,000 117,000 104,000 Jan 65,000 78,000 91,000 114,000 146,000 195,000 Feb Aug Sep Mar Jun In order to meet the product demand, the company has established a policy requiring that ending inventory for each month must be equal to 90% of the units expected to sold in the next month. The cost to purchase each unit of product is $19. Purchases are typically paid for as follows: 50% paid in the month of purchase, and the remaining 50% paid in the month after purchase. All sales are on credit, with no discount, and payable within 15 days. The company's collections on account usually are 25% in the month of sale, 50% in the month immediately after the sale, and 25% in the second month after sale. The company has very rigorous credit policy and there are virtually no bad debts. The company's operating expenses are shown below: Variable: Sales Commissions $3 per unit Fixed: $72,000 2,500 2,400 3,000 4,000 Wages Utilities Insurance expired Depreciation Miscellaneous All operating expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. New fixed assets will be purchased during May for $30,000. The company declares dividends of $16,000 each quarter, payable in the first month of the following quarter. YXL's Balance Sheet at March 31 is as follows. ASSETS $23,000 2,808,000 1,949,400 28,800 193,600 $5,002,800 Cash Accounts receivable* Inventory (102600 units)** Unexpired insurance Fixed assets (net of depreciation) Total Assets LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock, (no par) Retained Earnings $1,061,150 16,000 400,000 3,525,650 $5,002,800 Total Liabilities & Equity *Accounts receivable consists of $624,000 from February sales and $2,184,000 from March Sales. Use these numbers for all scenarios. ** Use this same March ending inventory number for all scenarios. The company has a good relationship with its bank and can borrow money at a 10% annual rate at any time and in any amount. All borrowing and repayments must be made at the end of the month. When the company is ready to make a payment, all unpaid interest must be paid first. After the unpaid interest is paid, then principal can be repaid as long as the minimum cash balance is maintained Required: Prepare a Master Budget for the three month period ending June 30th. Include the following detailed budgets: 1. a. A sales budget by month and in total b. A schedule of budgeted cash collections from sales and accounts receivable by month and in total c. A purchases budget in units and dollars by month and in total d. A schedule of budgeted cash payments for purchases by month and in total 2. A cash budget by month and in total. 3. A budgeted income statement for the three-month period ending June 30. Use the contribution approach. 4. A budgeted balance sheet as of June 30. YXL Inc Budgeted Balance Statement June 30 201X Assets 15,000 Cash AR Inventory 117000 units at $19 2,223,000 Unexpired insurance Fixed assets, net Total Assets Liability& Equity AP Interest Payable Dividends payable Note payable-bank Capital Stock, no-par Retainrd Earings Total Liabilities & Equity YXL Inc. 15 16 Comparative Budget/Actual Balance Sheet-Horizontal Analysis June 30 and March 31, 201X Budget June 30 201X 7 8 Actual March 31 201X Percent Change 9 Cash Change 0 AR 1 Unexpired insurance 2 Fixed assets, net 23 Total Assets 4 25 AP 26 Interest Payable 27 Dividends payable 28 Notes payable-bank 29 Capital Stock, no-par 80 Reained Earnings 1 Total Liability & Equity 2 4 SENARIO 1 85 Balance Sheet detail: 6 AR 7 May Sales 8 June Sales 9 10 1 2 RE 3 Beg RE 4 Net income 5 Less Dividends declared 8 SCENARIO 9 Contribution Margin and BEP 0 1 Unit Sales price 2 Unit purchase price 3 Unit sales Commissions 4 Unit Contribution Margin 5 6 Fixed Costs for three month period 7 Wages 8 Utilities 9 Insurance expired 0 Depression 1 Miscellaneous 2 Total Fixed Costs 4 Break Even Point 5 Fixed Costs/Unit CM 6 Fixed Costs/CM%