Attached is what I have completed already for my master budget; however, in the Cash Budget section my Total Cash Disbursements are over - should be $799, 726. Also, my Ending Cash Balance for June should be $58,121 - I am way over. Below are the instructions, and checkpoints to assist.

Required: You need to prepare a comprehensive 6-month budget, including supporting schedules and a report for the period January 1, 2010 to June 30, 2010 for Henron, Inc (a fictional company). This project must include: 1.Sales Forecast and Budget.......... 2.Cash Receipts budget................ 3.Purchase budget........................ 4.Cash Purchases Disbursements budget..... 5.Operating Expense budget...... 6.Summary Cash budget............ 7.Budgeted Income Statement..... 8.Budgeted Balance Sheet............ Notes and Hints 1.All 8 parts must be submitted before I grade the project. 2.The schedules/budgets must be prepared on Excel. The templates I have prepared must be used as is. 3.Part of this project is demonstrating proper use of Excel. You may only input a ?hard number? into a pink cell. All yellow cells must be formula based (no numbers included ? use appropriate cell referencing). 4.I recommend constructing the formulas for one month and then copying the formulas over to the remaining months. 5.Rounding is encouraged and you may ignore interest and taxes. 6.The budget templates and this instruction sheet are located on the course materials page. Make sure you save the file to excel and then open the file through Excel (not Internet Explorer). 7.Check figures are also located on the course materials page. INFORMATION FOR HENRON, INC. BUDGET PROJECT 1.Heron, Inc. is a company that re-sells one product, a particularly comfortable lawn chair. An overseas contractor makes the product exclusively for Heron, so Heron has no manufacturing-related costs. 2.As of 11/09, each lawn chair costs Heron $4 per unit. Henron sells each chair for $10 per unit. 3.The estimated sales (in units) are as follows: Nov 0911,250 Dec 0911,600 Jan 1010,000 Feb 1011,400 Mar 1012,000 Apr 1015,600 May 1018,000 June 1022,000 July 1018,000 4.Per an existing contract, the cost of each chair is scheduled to increase by 5% on March 1, 2010. In addition, because of increasing costs of plastic webbing, the cost is anticipated to increase by an additional 5% on May 1, 2010. To offset these increases, the company plans to raise the sales price to $11.25 per unit beginning May 1, 2010. The sales forecast (i.e., estimated sales in units) takes this price increase into account. 5.Thirty percent of any month?s sales are for cash, and the remaining 70% are on credit. Thirty percent of the credit sales are collected in the month of sale, 50% are collected in the following month, and 16% are collected in the second month after the sale. The remaining receivables are deemed uncollectible. Bad debts are written off in the month the debt is deemed uncollectible (e.g. if the sale is made in January and is not collected by the end of March, it is written off in March.) No accrual for estimated bad debts is made in the month of sale. 6.The firm?s policy regarding inventory is to stock (i.e. have in ending inventory) 40% of the forecasted demand in units (i.e., estimated sales) for the next month. Heron uses the first-in, first-out (FIFO) method in accounting for inventories. 7.Forty percent of the inventory purchases are paid for in the month of purchase and the remaining 60% are paid in the following month (i.e. all of the previous month?s Accounts Payable are paid off by the end of any month.) 8.Per a prior contract, a cash payment of $50,000 for equipment previously purchased is due in January. Another payment of $30,000 is due in February. Depreciation on the equipment previously purchased is included in the overhead cost detailed in item 11 below. Also, dividends of $12,000 are to be paid in March. 9.Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred): Salaries and Wages$3,000 Sales Commissions7% of sales revenue Rent$8,000 Other Variable Cash Expenses6% of sales revenue Supplies Expense: See note$2,000 Other: See note $48,000 Note: Other general and administrative overhead is expected to be $48,000 per month. Of this amount, $24,000 represents depreciation and other non-cash expenses. The company maintains on hand one month?s worth of supplies. 10.The company must maintain a minimum cash balance of $15,000. Borrowing can make up shortfalls. For simplicity, assume that the bank will only lend (and accept repayments) in $1,000 increments. Ignore interest on the loan in your calculations, but minimize the amount borrowed and pay off any loans as soon as possible. 11.Cash on hand as of December 31, 2009 is expected to be $15,000. In addition, there will be no notes payable as of this date. 12.See below the other Balance Sheet accounts with their expected balances as of December 31, 2009: ?Supplies..............................................$ 2,000 ?Property, Plant and Equipment...........1,050,000 ?Accumulated Depreciation................. 526,475 ?Common Stock................................... 200,000 ?Retained Earnings.............................. 322,811 CHECKPOINTS:

Cash Receipts Budget Total Cash Receipts, January: $104,200 Total Cash Receipts, Jan ? June: $842,847 Uncollectible, January: $ 3,150 Uncollectible, Jan ? June: $ 20,118 Purchase Budget Total Purchases, Jan ? June: $391,200 Cash Budget Total Cash Disbursements, Jan ? June: $799,726 Ending Cash Balance, June: $ 58,121 Budgeted Income Statement Operating Expenses, Total: $508,318 Net Income, Total: $ 56,234 Budgeted Balance Sheet Total Assets: $621,023

Principles of Managerial Accounting Heron, Inc. Budget Project Heron, Inc. Sales Budget For the 6 mos ending June '10 Budged unit sales Selling price per unit Total Sales Nov '09 Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 11,250 11,600 10,000 11,400 12,000 15,600 $ 10.00 $ 10.00 ### $ 10.00 $ 10.00 $ 10.00 $ 112,500 $ 116,000 $ 100,000 $ 114,000 $ 120,000 $ 156,000 Cash Sales % Credit Sales % Cash Sales Credit Sales Total Sales Current month A/R Collections 1 month prior A/R Collections 2 months prior A/R Collections Uncollectible $ $ May '10 18,000 11.25 202,500 30% 70% $ $ 33,750 $ 78,750 112,500 $ 34,800 $ 81,200 116,000 $ 30,000 $ 70,000 100,000 $ 34,200 $ 79,800 114,000 $ 36,000 $ 84,000 120,000 $ 46,800 109,200 156,000 $ $ 60,750 141,750 202,500 $ $ $ $ $ 6 mos total 282,000 197,400 479,400 80,472 842,847 30% 50% 16% 4% Heron, Inc. Cash Collections For the 6 mos ending June '10 Current month cash Sales Current month A/R Collections 1 month prior A/R Collections 2 months prior A/R Collections Total cash collections Bad Debt Expense Desired ending inventory % June '10 6 mos total 22,000 89,000 ### $ 247,500 $ 940,000 Jan '10 30,000 21,000 40,600 12,600 $ 104,200 $ 3,150 Feb '10 Mar '10 Apr '10 May '10 June '10 34,200 36,000 46,800 60,750 74,250 23,940 25,200 32,760 42,525 51,975 35,000 39,900 42,000 54,600 70,875 12,992 11,200 12,768 13,440 17,472 106,132 $ 112,300 $ 134,328 $ 171,315 $ 214,572 3,248 2,800 3,192 40% Page 1 of 5 3,360 4,368 20,118 $ 74,250 $ 173,250 $ 247,500 $ $ 282,000 658,000 940,000 Principles of Managerial Accounting Heron, Inc. Budget Project Heron, Inc. Purchase Budget For the 6 mos ending June '10 Nov '09 11,250 4,640 15,890 Budged unit sales Add desired ending inventory Total needs Less Beginning Inventory Required Purchases Cost per unit Purchases Dec '09 Jan '10 Feb '10 Mar '10 Apr '10 May '10 June '10 6 mos total 11,600 10,000 11,400 12,000 15,600 18,000 22,000 89,000 4,000 4,560 4,800 6,240 7,200 8,800 7,200 38,800 15,600 14,560 16,200 18,240 22,800 26,800 29,200 127,800 4,640 4,000 4,560 4,800 6,240 7,200 8,800 35,600 10960 10560 11640 13440 16560 19600 20400 92200 $ $ % Paid in Month of Purchase % Paid in Month after Purchase 4.00 43,840 $ ### $ 42,240 $ 4.00 $ 46,560 $ 4.20 $ 56,448 $ 4.20 69,552 $ $ 4.41 86,436 40% 60% Heron, Inc. Schedule of Budgeted Cash Disbursements for Merchandise Purchases For the 6 mos ending June '10 Cash purchases 1 month prior A/P Collections Cash disbursements for merchandise purch. Fixed Operating expenses: Salaries and Wages Rent Supplies Expense Other - Overhead Other - Depreciation Jan '10 16,896 $ 25,344 $ 42,240 $ $ $ Feb '10 Mar '10 Apr '10 May '10 June '10 18,624 $ 22,579 $ 27,821 $ 34,574 $ 35,986 27,936 33,869 41,731 51,862 53,978 46,560 $ 56,448 $ 69,552 $ 86,436 $ 89,964 Variable Operating Expenses: 3,000 Sales Commissions, % of Revenue 8,000 Other Variable Cash Expenses, % of Revenue 2,000 24,000 24,000 Page 2 of 5 7% 6% 6 mos total 156,480 234,720 $ 391,200 $ $ ### 89,964 391,200 Principles of Managerial Accounting Heron, Inc. Budget Project Heron, Inc. Operating Expense Budget For the 6 mos ending June '10 Salaries and Wages Sales Commissions Rent Other Variable Cash Expenses Supplies Expense Other - Overhead Other - Depreciation Bad Debt Expense Total operating expenses Depreciation and noncash items Bad Debt Expense Cash disbursements for operating expenses Jan '10 Feb '10 Mar '10 Apr '10 May '10 June '10 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 $ 3,000 7,000 7,980 8,400 10,920 14,175 17,325 8,000 8,000 8,000 8,000 8,000 8,000 6,000 6,840 7,200 9,360 12,150 14,850 2,000 2,000 2,000 2,000 2,000 2,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 3,150 3,248 2,800 3,192 3,360 4,368 77,150 79,068 79,400 84,472 90,685 97,543 24,000 24,000 24,000 24,000 24,000 24,000 3,150 3,248 2,800 3,192 3,360 4,368 $ 50,000 $ 51,820 $ 52,600 $ 57,280 $ 63,325 $ 69,175 Equipment payment - January Equipment payment - February Dividends - March Minimum Monthly Cash Budget $ $ $ $ $ 6 mos total 18,000 65,800 48,000 56,400 12,000 144,000 144,000 20,118 508,318 144,000 20,118 $ 344,200 $ 50,000 30,000 12,000 15,000 Heron, Inc. Cash Budget For the 6 mos ending June '10 Cash balance, beginning Add collections from customers Total cash available Less disbursements: Cash disbursements for merchandise purch. Cash disbursements for operating expenses Equipment purchases Dividends Total cash disbursements Excess of receipts over disbursements Financing: Borrowing-note Repayments-note Total financing Cash balance, ending $ $ Jan '10 15,000 $ 104,200 119,200 Feb '10 Mar '10 Apr '10 May '10 June '10 14,960 $ 14,712 $ 14,964 $ 15,000 $ 15,000 106,132 112,300 134,328 171,315 214,572 121,092 127,012 149,292 186,315 229,572 42,240 50,000 50,000 46,560 51,820 30,000 142,240 (23,040) 38,000 38,000 14,960 $ $ $ $ 6 mos total 89,636 842,847 932,483 $ $ $ $ $ $ 391,200 344,200 80,000 12,000 827,400 105,083 69,000 69,000 105,083 56,448 52,600 69,552 57,280 86,436 63,325 89,964 69,175 128,380 (7,288) 12,000 121,048 5,964 126,832 22,460 149,761 36,554 159,139 70,433 22,000 9,000 21,554 (21,554) 15,000 $ $ 39,986 $ (39,986) $ 30,447 $ 22,000 14,712 $ 9,000 14,964 $ 7,460 (7,460) 15,000 $ Page 3 of 5 Principles of Managerial Accounting Heron, Inc. Budget Project Heron, Inc. Budgeted Income Statement For the 6 mos ending June '10 Jan '10 Feb '10 Mar '10 Apr '10 Sales, net Cost of goods sold: Gross margin Total operating expenses Net Income Heron, Inc. Budgeted Balance Sheet 6/30/2010 Assets Current Assets: Cash Accounts receivable Supplies Merchandise Inventory Plant and Equipment: Buildings and Equipment Accumulated Depreciation Total assets Liabilities and Equity Accounts payable Capital stock Retained earnings Total liabilities and equity Page 4 of 5 May '10 June '10 Total FIFO Calculation Beg Inventory Jan Feb Mar Apr May Jun Beg Inventory - Units Purchases Purchases Units COGS COGS Units Ending Inventory Ending Inventory - Units