Accounting 1C Long Term Project Master Budget You need to prepare a Master Budget for the Co. The company has an exclusive right to sell Worxter Widgets and sales have been brisk, The Master Budget will be for the next three months starting April 1. The following information is avalable 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 Widgets are forecasted to sell at S25 each. Recent actual and projected sales (in units are as follows Jan Feb Mer Actual 56.000 67.000 78,000 Projected Apr 98,000 May 126,000 Jun 168,000 Projected Jul 112.000 Aug 101.000 Sep 90,000 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 cach unit al product is $16. 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 credin, with no discount, and payable within 15 days. The company's collections an 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 cod policy and there are virtually na trad dobis The company's operating expenses are shown below. Variable Sales Commissions $3 per unit Fixed: Wages utilnies Insurance expired Depreciation Mscellaneous $45,000 1,600 1,500 1.900 2,500 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 S16,000 each quer, payable in the first month of the following quarter. Page 1 . Jos Balance Sheet at March 31 is as follows ASSEIS Cash $14,000 Accounts receivable 1,956,500 Inventory (19200 units)" 1,411.200 Unexpired insurance 18,000 Fixed assets (not of depreciation) 193,600 Total Assets $3,593,300 LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock. (no par) Rolained Earnings Total Liabilities & Equity $268.000 16.000 400,000 2,409,300 $3,593.300 *Accounts receivable consists of $435,500 from February sales and $1,521,000 from March Sales. Use these numbers for both scenarios. Use this same March ending inventory number for both 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 LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock. (no pur) Retained Eamings Total Liabilities & Equity $768,000 16,000 400,000 2.409.300 $3,593,300 "Accounts receivable consists of $435,500 from February sales and $1,521,000 from March Sales. Use these numbers for both scenarios. ** Use this same March ending inventory number for both scenarios. The company has a good relationship with its bank and can borry mocy 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 balunce is maintained P2 . . Co. Required: You will complete all tasks listed below for the onginal facts above...this will be Scenario 2 Then you will repeat the entire process for Scenario 2. This scoond scenario will show what would happen if there was an increase al 20% lwerly percent) in the number of units soki This is essentially a flexible budget. SCENARIO 1 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 unts 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 margin approach. 1. A budgeted balance sheet as of June 30 5. Calculate the contribution Margin and Break Even amounts (for the three month period based on your skins about variable and fixed costs SCENARIO 2 Repeat all the steps (1-5) shown above assuming that the number of units expected to be sold increase by 20%. The month January to March have a ready occurred so those will be the same for both Scenanos. Please pay attention to the information above when it says: "Accounts receivable consists of $435.500 from February saks and 51 521,000 from March Sales Use these numbers for both scenarios. ** Use this same March ending inventory number for both scenanas. Budgeted Ending Inventory for Jurie is based on July sales. Therefore you will need to increase the expected July sales in Scenario 2 and this will mean June Ending Inventory will be different in Scenario 2. Here are some check ligures to check your firul work. If you agree with those check numbers it is an important confirmation, although it is not guarantee that everything is correct. Amounts for the quarter: Scenario 1 1 Scenario 2 Sales budget $10.792.000 $12.230,400 Budgeted cash collections S8053,500 59.272,900 Budgeted purchases 56.473.600 58,050,560 Budgeted cash payments purchases S6.300,000 S7,689,600 Ending Cash Balance $395,671 $15,000 Inc Strnt Interest Expense $1.729 $9,367 Inc Strt Net income 52 584.771 $3.126.932 Bal Sheet AR S4,095,000 $4.914,000 Bal Sheet Inventory S1,612,800 $1.935,360 Bal Sheet AP $940.800 $1.128.960 Bal Sheet Retained Earnings (RE) S4,978,071 $5,520,233 Bal Sheet Total Assets (-Liab+0E) S8,334,271 $7.095,760 Accounting 1C Long Term Project Master Budget You need to prepare a Master Budget for the Co. The company has an exclusive right to sell Worxter Widgets and sales have been brisk, The Master Budget will be for the next three months starting April 1. The following information is avalable 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 Widgets are forecasted to sell at S25 each. Recent actual and projected sales (in units are as follows Jan Feb Mer Actual 56.000 67.000 78,000 Projected Apr 98,000 May 126,000 Jun 168,000 Projected Jul 112.000 Aug 101.000 Sep 90,000 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 cach unit al product is $16. 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 credin, with no discount, and payable within 15 days. The company's collections an 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 cod policy and there are virtually na trad dobis The company's operating expenses are shown below. Variable Sales Commissions $3 per unit Fixed: Wages utilnies Insurance expired Depreciation Mscellaneous $45,000 1,600 1,500 1.900 2,500 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 S16,000 each quer, payable in the first month of the following quarter. Page 1 . Jos Balance Sheet at March 31 is as follows ASSEIS Cash $14,000 Accounts receivable 1,956,500 Inventory (19200 units)" 1,411.200 Unexpired insurance 18,000 Fixed assets (not of depreciation) 193,600 Total Assets $3,593,300 LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock. (no par) Rolained Earnings Total Liabilities & Equity $268.000 16.000 400,000 2,409,300 $3,593.300 *Accounts receivable consists of $435,500 from February sales and $1,521,000 from March Sales. Use these numbers for both scenarios. Use this same March ending inventory number for both 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 LIABILITIES AND EQUITY Accounts payable (purchases) Dividends payable Capital stock. (no pur) Retained Eamings Total Liabilities & Equity $768,000 16,000 400,000 2.409.300 $3,593,300 "Accounts receivable consists of $435,500 from February sales and $1,521,000 from March Sales. Use these numbers for both scenarios. ** Use this same March ending inventory number for both scenarios. The company has a good relationship with its bank and can borry mocy 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 balunce is maintained P2 . . Co. Required: You will complete all tasks listed below for the onginal facts above...this will be Scenario 2 Then you will repeat the entire process for Scenario 2. This scoond scenario will show what would happen if there was an increase al 20% lwerly percent) in the number of units soki This is essentially a flexible budget. SCENARIO 1 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 unts 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 margin approach. 1. A budgeted balance sheet as of June 30 5. Calculate the contribution Margin and Break Even amounts (for the three month period based on your skins about variable and fixed costs SCENARIO 2 Repeat all the steps (1-5) shown above assuming that the number of units expected to be sold increase by 20%. The month January to March have a ready occurred so those will be the same for both Scenanos. Please pay attention to the information above when it says: "Accounts receivable consists of $435.500 from February saks and 51 521,000 from March Sales Use these numbers for both scenarios. ** Use this same March ending inventory number for both scenanas. Budgeted Ending Inventory for Jurie is based on July sales. Therefore you will need to increase the expected July sales in Scenario 2 and this will mean June Ending Inventory will be different in Scenario 2. Here are some check ligures to check your firul work. If you agree with those check numbers it is an important confirmation, although it is not guarantee that everything is correct. Amounts for the quarter: Scenario 1 1 Scenario 2 Sales budget $10.792.000 $12.230,400 Budgeted cash collections S8053,500 59.272,900 Budgeted purchases 56.473.600 58,050,560 Budgeted cash payments purchases S6.300,000 S7,689,600 Ending Cash Balance $395,671 $15,000 Inc Strnt Interest Expense $1.729 $9,367 Inc Strt Net income 52 584.771 $3.126.932 Bal Sheet AR S4,095,000 $4.914,000 Bal Sheet Inventory S1,612,800 $1.935,360 Bal Sheet AP $940.800 $1.128.960 Bal Sheet Retained Earnings (RE) S4,978,071 $5,520,233 Bal Sheet Total Assets (-Liab+0E) S8,334,271 $7.095,760