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CARLYLE LIMITED Carlyle Limited is a wholesaler operating in Halifax, Nova Scotia. Carlyle purchases sporting merchandise from a variety of suppliers and resells the merchandise
CARLYLE LIMITED Carlyle Limited is a wholesaler operating in Halifax, Nova Scotia. Carlyle purchases sporting merchandise from a variety of suppliers and resells the merchandise on account to retail stores. In addition, Carlyle sells some merchandise to retail customers at its store in Bayer's Lake. Carlyle is required to make a loan repayment to a private investor of $250,000 on December 31, 2020. The following information is available: The cash balance on November 1 is $45,000 Actual sales for October and estimated sales for November and December are as follows: Retail Cash Sales Sales on Account October $55,000 $500,000 November $95,000 $800,000 December $175,000 $ 1.200.000 Sales on account are collected over a two-month period as follows: 40% in the month of sale, 57% in the following month. The remaining 3% is uncollectible. Actual purchases of merchandise for October and estimated purchases in November and December from suppliers are as follows: October $360,000 November $600,000 December $450,000 Merchandise Purchases Thirty percent of a month's inventory purchase are paid during the month of purchase. The remaining seventy percent is paid the following month. Actual Labour and Selling and Administrative costs for October and estimated costs for November and December are provided below: Labour Costs Selling and Administrative October $62,000 $170,000 November $85,000 $180,000 December $150,000 $190,000 Included in the monthly Selling and Administration expenses is $25,000 related to depreciation for the retail store and fixtures. New display equipment costing $50,000 will be purchased for cash in November. Dividends of $75,000 will be paid during December. The company maintains a minimum cash balance of $20,000 and has an open line of credit that permits Carlyle to borrow up to $75,000. Carlyle has never used this line of credit. Required: Prepare Cash Budgets for November and December. Please provide your comments and recommendations to Carlyle based on your analysis of the budgets
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