ACompany History and Sales Projections Retro Vinyl $($RV$)$ produces bespoke cabinetry for vinyl record players in Santa Fe$,$ New Mexico. The company utilizes heart of pine wood to manufacture truly unique furniture that not only looks beautiful but sounds amazing as well. The proprietors of RV have spent the last $30$ years in the business of remodeling and design of furniture. As such, the owners of RV engage in all aspects of the company including the design, drafting, and project management. Recognizing a new niche market related to the rise in vinyl record sales, the proprietors of RV launched the company in August of $2020$ with the intent to begin production and distribution of the cabinets across the country in the first quarter of $2021.$ Together, partner contributes $$500,000$ in cash in exchange for company stock while an additional partner contributes land and a building in exchange for $$500,000$ in company stock. The land has a market value of $$80,000$ while the historical cost of the building is noted at $$520,000$ with $$100,000$ in accumulated depreciation. one Although the sales team has worked diligently to gain an early foothold in the market, the company is bracing for disparate orders for the cabinets throughout fiscal year $2021$ as the product has $1$ or a relatively little regional national notoriety given the relative age of the business. However, the company has secured a contract with national furniture store that has agreed to purchase $200$ units for each quarter in $2021$ as well as the first quarter of $2022.$ The company expects local and regional advertising will also prompt other retailers to place orders for the cabinets. As such, management forecasts sales in units $($cabinets$)$ for the next five quarters are as follows: $200$ units $($Q$12021),210$ units $($Q$22021),225$ units $($Q$32021),245$ units $($Q$42021),$ and $270($Q$12022).$ The total sales price for each artisan cabinet is $$850.$ Treasury Management RV$\text{'}$s collection practices maintains all sales on credit, with no discounts, due in $30$ days. Despite the $30-$day due date, the owners note that in their previous furniture manufacturing experience only $75$ percent of a quarter's sales are collected by quarter$-$end. Another $20$ percent is collected in the following quarter and the remaining $5$ percent is collected in the following quarter. Given the current scale of sales and operations, bad debt is negligible and ignored. Related to payment of RV$\text{'}$s materials suppliers and the $60$ day credit terms typically afforded in the industry, the company expects to remit cash for purchases of raw materials at a rate of $30$ percent in the quarter of purchase with the remaining $70$ percent in the following quarter. All other operating expenses are paid in cash during the quarter in which they are incurred. The owners established the cash policies of RV to safely maximize profitability. Management requires a minimum ending cash balance for each quarter of $$10,000.$ The company has a credit facility with First National Bank of New Mexico based in Albuquerque. First National has extended a $$75,000$ line$-$of$-$credit in order to assist RV in attaining additional cash proceeds as necessary. RV borrows at the beginning of each quarter, and at the end of the year, the company repays the short$-$term loan to First National Bank of New Mexico, with the assumption that the company retains at least for each quarter of $$10,000.$ The company has a credit facility with First National Bank of New Mexico based in Albuquerque. First National has extended a $$75,000$ line$-$of$-$credit in order to assist RV in attaining additional cash proceeds as necessary. RV borrows at the beginning of each quarter, and at the end of the year, the company repays the short$-$term loan to First National Bank of New Mexico, with the assumption that the company retains at least $$10,000$ in cash. The interest rate on the credit facility is $5\mathrm{.}75\%$ per quarter $($assume simple, not compounding, interest$).$ Should RV draw down on the credit facility, the company has also elected to pay interest to First National Bank of New Mexico for all borrowings at the end of the fiscal year. In other words, the interest related to a cash draw in January is paid at the end of $2.$ the fourth quarter of $2021.$ Further, the company plans to declare and pay a quarterly dividend of $$12,000.$ Production and Procurement The contract with RV$\text{'}$s clients maintain that the company must fulfill orders within ten business days of order receipt. Thereto, RV keeps a modest level level of inventory on hand. For budgeting TTT $$ Production and Procurement The contract with RV$\text{'}$s clients maintain that the company must fulfill orders within ten business days of order receipt. Thereto, RV keeps a modest level of inventory on hand. For budgeting purposes, RV plans to construct enough cabinets during each quarter such that the ending balance of cabinets each quarter will meet $20$ percent of sales projections for the next quarter.Retro Vinyl

Budgeting Assumptions

For the year ended D