ASSETS Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Cavaliers Company Balance Sheet As of June 30, 2020 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities $ 5,000 Accounts Payable $ 11,000 15,000 Commissions Payable 1,300 Income Taxes Payable 3,500 1,600 Dividends Payable 21,600 Total Current Liabilities 15,800 Long-term debt 70,000 Property Plant & Equipment Land Equipment Accumulated Depreciation Net PP & E 60,400 85,000 (22,000) 123,400 Stockholders' Equity Common Stock Retained Earnings Total Stockholders' Equity 49,200 10,000 59,200 Total Assets $ 145,000 Total Liabilities & SE S 145,000 Expected sales are $49,000, $60,000, and $75,000, respectively in July, August, and September. All sales are on credit. The company collects 75% of sales in the month of the sale and 25% in the month after the sale. The cost of goods sold is equal to 55% of sales. The company desires an ending inventory equal to 20% of the next month's cost of goods sold. All purchases of inventory are on credit. The company pays for 80% of its purchases in the month of the purchase and 20% in the month after the purchase. The company pays a 3% sales commission to its sales staff that is paid in the month after it is earned. The company also incurs a utilities expense that is equal to $300 plus 1% of sales. This expense is paid The company also incurs a utilities expense that is equal to $300 plus 1% of sales. This expense is paid in the month it is incurred. Other Selling and Administrative Expenses, paid in the month they are incurred, include Advertising $1,100 per month, Salaries $1,400 per month and Depreciation $900 per month. On July 1 the company purchased an insurance policy covering 24 months for $12,000. The company pays interest on its long-term debt at the end of each month. Interest is equal to 1% of the balance of long-term debt at the beginning of the month. On August 10 the company will pay cash for Land, costing $6,500. On July 27 the company will declare a cash dividend of $5,000 and will pay it in August The company requires a minimum cash balance of $5,000 and will use any cash surplus to pay down long-term debt. The company borrows cash in $1,000 increments. Cavaliers Company Sales Budget S&A Expenses Budget July August September Credit Sales $ 49,000 $ 60,000 $ 75,000 Variable Selling & Admin Expense Sales Commissions Utilities Total Variable S&A Expenses Cash Receipts: From Current Month Sales From Prior Month Sales Total Cash Receipts (1) $ 57,250 Fixed Selling & Admin Expenses Utilities Advertising Salaries Cavaliers Company S&A Expenses Budget ily August September July August 9,000 $ 60,000 $ 75,000 (4) Variable Selling & Admin Expenses Sales Commissions Utilities Total Variable S&A Expenses 1,960 2,400 Fixed Selling & Admin Expenses Utilities 0 $ 57,250 Advertising Salaries 1,100 1,400 1,100 1,400 Check my w Inventory Purchases Budget July August September Depreciation Insurance Total Fixed S&A Expenses $ 33,000 $ 41,250 COGS Desired Ending Inventory Total Inventory Needed Beginning Inventory Inventory Purchabes Cash Payments for S&A Expe Sales Commissions Utilities (2) $ 34,650 Advertising Salaries Depreciation Cash Payments for Purchases For Current Month Purchases Insurance $ 25,560 11,000 For Prior Month Purchases Total Payments for S&A Exp Total Cash Payments $ 36,560 (3) Check my work Salaries 1,400 1,400 900 900 Depreciation Insurance August September (5) Total Fixed S&A Expenses 4,200 4,200 33,000 $ 41,250 790 900 34,650 1,100 1,100 Cash Payments for S&A Expenses Sales Commissions Utilities Advertising Salaries Depreciation Insurance Total Payments for S&A Expenses 1,400 1,400 (6) (7) 4,870 $ 16,590 $ Cash Budget Income Statement July August Sales Beginning Balance Cash Receipts Total Cash Available 57,250 Less: Variable Costs 56,750 Cash Payments: For Inventory Purchases For S&A Expenses 36,560 COGS Variable S&A Expenses Contribution Margin Less: Fixed Costs Fixed S&A Expenses Interest Expense Pre-tax Income (8) For Interest For Stock Investment For Land Less: Income Taxes Income Statement July August $ 49,000 $ 60,000 Sales Less: Variable Costs COGS Variable S&A Expenses Contribution Margin (11) Less: Fixed Costs Fixed S&A Expenses Interest Expense Pre-tax Income $ 15,190 $ 19,640 Less: Income Taxes 3,798 4,910 Net Income For Dividends For Taxes Total cash payments 57,350 (9) Surplus/(Deficit) New Borrowing / (Repayment) Ending Cash Balance 7,613 (10) 6,000 $ 5,000 Balance Sheet July August ASSETS LIABILITIES & TAAI IAINERA Net Income $ 11,393 $ 14,730 Q July August LIABILITIES & AISIII nnnAIHIYV Balance Sheet July August ASSETS LIABILITIES & STOCKHOLDER Current Liabilities Current Assets (12) Accounts Payab (13) Commissions P Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets 12,250 (14) Income Taxes P (15) Dividends Paya Total Current Lia Property Plant & Equipment Long term debt $ 6,390 (18) LIABILITIES & STOCKHOLDERS EQUITY Current Liabilities Accounts Payable Commissions Payable Income Taxes Payable Dividends Payable Total Current Liabilities (19) (20) Long term debt (21) ) Stockholders' Equity Long term debt Property Plant & Equipment Stock Investment Land (16) Stockholders' Equi 85,000 85,000 Common Stock Equipment Accumulated Depreciation (17) Retained Earnings Total PP &E Total Stockholders TOTAL ASSETS $ 158,250 $ 167,350 TOTAL LIABILITIES STOCKHOLDERS E . Long term debt (21) Stockholders' Equity Common Stock 49,200 49,200 (22) Retained Earnings Total Stockholders Equity TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 158,250 $ 167,350 1. What are Total Cash Receipts from customers for July? O $51,750 $36.750 O $40,500 $15,000 O $57,250 2. What are Total Purchases of Inventory for July? O $33,050 $37,350 $34,650 $35,150 $31,950 3. What ore Totol Cosh Payments for Purchoses of Inventory for August? $27,720 $34,650 O$ 6,390 $36,560 $34.110 4. What is Total Commissions Expense Expense for July? O $1,960 O $1,800 $1,470 O $3,270 $1,300 5. What Is Total Insurance Expense for July? $1,500 O$o O $ 500 $12,000 $1,000 6. Whot is the Total Cash Payment for Depreciation Expense for July? Oso $ 1,800 $22.900 $ 900 $22.000 7. What is Total Cosh Poyment for Insurance Expense for August? o $1,500 $ 500 $1,000 OSO $12,000 8. Who is Total Interest Expense for July? $1,400 O $ 700 $7,000 $2.100 OSO 9. What is Total Cosh Surplus (Deficit) for July? $ 600 $7613 S1600) $5,400 $(7100) 10. Who is Total Net Borrowing.(Repayment) for August? $(7.613) $o O $ (2,613) $ 2,613 $ 6,000 11. What is the Contribution Morgin for August? $60,000 O $57,600 $14,730 O $20,090 $24,600 12. What is the balance of Cash on August 31, 2020? $ 5,000 $5,400 OSO $70,000 $5,000 13. What is the balance of Accounts Receivable on August 31, 2020? O $15,000 $16,000 O $ 27.250 O $12,250 O $18.750 14. Who is the balance of Prepaid Insurance on July 31, 2020? O $11,000 $11,500 O $12.000 OSO O $500 15. What is the balance of Inventory on August 31, 2020? $34,650 $34.110 O $6,600 O $8,250 $1,600 16. What is the balance of Land on August 31, 2020? $128,100 $ 6,500 $ 60,400 $ 66,900 OSO 17. What is the balance of Accumulated Depreciation, as reflected on the Balance Sheet, on July 31, 20207 O $11,000) $123,800) O $122,900) O $(900) $(21,100) 18. What is the balance of Accounts Payable on August 31, 2020? O$ 6,390 OS 6,930 $11,000 $13,320 $3,250 19. What is the balance of Commissions Poyable on July 31, 2020? $3,270 $1,470 $1,300 $0 $1,800 20. Who is the bolonce of Dividends Payable on July 31, 2020? $ 5,000 $4,910 $ 3,798 OSO $10,000 21. What is the balance of Long Term Debt on July 31, 20207 O$ 6,000 O $5,400 $76,000 $73,388 $70,000 O $5,000 O$ 4,910 $ 3,798 OSO $10,000 21. What is the balance of Long-Term Debt on July 31, 2020? O$ 6,000 O $5,400 O $76,000 O $73,388 $70,000 22. Whet is the balance of Retoined Earnings on August 31, 2020? $10,000 $31.123 O $21,123 $16,393 $36,123