Bobcat Printing makes custom t---shirts and other promotional products for student organizations and businesses. It is beginning its first year of operations and needs to plan for its first quarter of operations. They would like to maximize their profits, and understand that accurate budgeting can help achieve that goal. The budgets will be prepared based on the following information:

a. Sales are budgeted at $30,000 for Month 1, $32,500 for Month 2, and $34,000 for Month 3. All sales will be done on account. Company does not expect to have any cash sales.

b. Sales are collected 50% in the month of the sale, and 50% in the month following the sale. c. Cost of Goods Sold is budgeted at 40% of Sales.

d. Monthly selling, general, and administrative expenses are as follows: donations are 10% of sales; advertising is 3% of sales; miscellaneous is 1% of sales; and rent is $5,000 per month. All SG&A expenses are paid in the month they are incurred.

e. Since all of the orders are custom made, no inventory is kept on hand at the end of the month.

f. Inventory purchases are paid in full in the month following the purchase. g. Bobcat Printing is planning to purchase a building in Month 3 for $8,000 in cash.

h. They would like to maintain a minimum cash balance of $2,500 at the end of each month. The company has an agreement with a local bank that allows them to borrow, with a total line of credit of $20,000. The interest rate on these loans is 1% per month (12% annual). They would as far as able, repay the loan on the last day of the month when it has enough cash to pay the full balance and maintain an adequate ending cash balance.

i. The owner makes a draw of $5,000 every month.

REFERENCE CHECKS:

Gross margin: $57,900 Total assets: $27,973 Ending retained earnings balance: $14,373

			Bobcat Printing			Bobcat Printing
			Pro-Forma Balance Sheet			Pro-Forma Cash Flow
$-			Assets			Cash flow from operating activities
			Cash	$-		Cash receipts from customers	$-
			Accounts Receivable			Cash payments for inventory	$-
	$-		Building			Cash payments for SG&A	$-
	$-		Total Assets	$-		Cash payments for interest
			Liabilities			Net cash flow from operating activities		$-
			Accounts Payable			Cash flow from investing activities
			Interest Payable	$-		Purchase of building
			Notes Payable	$-		Net cash flow from investing activities		$-
			Total Liabilities			Cash flow from financing activities
			Equity			Cash from loans
			Capital Investment	$-		Payments for loans
			Retained Earnings	$-		Payments to owners	$-
			Total Equity	$-		Net cash flow from financing activities		$-
			Total Liabilities & Equity	$-		Net change in cash		$-
						Plus: Beginning Balance		$-
						Ending Cash Balance		$-