Alliance Medical Supply has applied for a loan. Marine National Bank has requested a budgeted balance sheet as of April $30,$ and a combined cash

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Read the requirements

Requirement $1.$ Show separate computations for cash, inventory, and owners' equity balances. Begin by calculating the cash balance.

Cash

Beginning balance

Cash inflows:

Cash sales

Collections

a$.$ March $31$ equipment balance, $$52,700$; accumulated depreciation, $$41,100.$

b$.$ April capital expenditures of $$42,900$ budgeted for cash purchase of equipment.

c$.$ April depreciation expense, $$400.$

d$.$ Cost of goods sold, $45\%$ of sales.

e$.$ Other April operating expenses, including income tax, total $$13,400,25\%$ of which will be paid in cash

and the remainder accrued at April $30.$

f$.$ March $31$ owners' equity, $$93,200.$

g$.$ March $31$ cash balance, $$40,200.$

h$.$ April budgeted sales, $$87,000,60\%$ of which is for cash. Of the remaining $40\%,$ half will be collected in

April and half in May.

i$.$ April cash collections on March sales, $$29,500.$

j$.$ April cash payments of March $31$ liabilities incurred for March purchases of inventory, $$17,700.$

k$.$ March $31$ inventory balance, $$29,600.$

I. April purchases of inventory, $$10,400$ for cash and $$36,300$ on credit. Half of the credit purchases will

be paid in April and half in May.

Requirements

Prepare the budgeted balance sheet for Alliance Medical Supply at April $30.$ Show separate

computations for cash, inventory, and owners' equity balances.

Ending balance

Prepare the combined cash budget for April.

Suppose Alliance Medical Supply has become aware of more efficient $($and more expensive$)$

equipment than it budgeted for purchase in April. What is the total amount of cash available for

equipment purchases in April, before financing, if the minimum desired ending cash balance is

$$17,000?($For this requirement, disregard the $$42,900$ initially budgeted for

equipment purchases.$)$

Before granting a loan to Alliance Medical Supply, Marine National Bank asks for a sensitivity

analysis assuming that April sales are only $$58,000$ rather than the $$87,000$ originally

budgeted. $($While the cost of goods sold will change, assume that purchases, depreciation, and

the other operating expenses will remain the same as in the earlier requirements.$)$

a$.$ Prepare a revised budgeted balance sheet for Alliance Medical Supply, showing separate

computations for cash, inventory, and owners' equity balances.

b$.$ Suppose Alliance Medical Supply has a minimum desired cash balance of $$21,000.$ Will the

company need to borrow cash in April?