Chair Medical Supply has applied for a loan. Pacific Commerce Bank has requested a budgeted balance sheet as of April 30, and a combined cash budget for April. As Chair Medical Supply's controller, you have assembled the following information:

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
Cash outflows:
Payment of March liabilities
Cash purchases
Payments for April (credit) purchases
Purchase of equipment
Operating expenses
Ending balance

Part 2

Calculate the inventory balance.

Inventory
Beginning balance
Add:
Purchases
Less:
Cost of goods sold
Ending balance

Part 3

Calculate the owners' equity balance.

Owners' Equity
Beginning balance
Add:
Revenues
Less:
Expenses
Ending balance

Part 4

Prepare the budgeted balance sheet for

Chair

Medical Supply at April 30.

	Chair Medical Supply
	Budgeted Balance Sheet
	April 30

Assets
Current assets:
Cash
Accounts receivable
Inventory
Total current assets
Plant assets:
Equipment
Accumulated depreciation
Total assets

Part 5

Liabilities
Current liabilities:
Accounts payable
Accrued expenses payable
Total liabilities
Owners' Equity
Owners' equity
Total liabilities and owners' equity

Part 6

Requirement 2. Prepare the combined cash budget for April.

Chair Medical Supply
Combined Cash Budget
For the Month Ended April 30
	Beginning cash balance, April 1
	Plus: Cash collections from customers
	Total cash available
	Less cash payments:
	Purchases
	Operating expenses
	Acquisition of equipment
	Ending cash balance, April 30

Part 7

Requirement 3. Suppose Chair 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 $14,000?

(For this requirement, disregard the $42,800 initially budgeted for equipment purchases.)

The amount of cash available for equipment purchases in April, before financing, if the minimum desired ending cash
balance is $14,000 (and disregarding the $42,800 initially budgeted for equipment purchases) is		.

Part 8

Requirement 4. Before granting a loan to Chair Medical Supply, Pacific Commerce Bank asks for a sensitivity analysis assuming that April sales are only $60,667 rather than the $91,000 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

Chair

Medical Supply, showing separate computations for cash, inventory, and owners' equity balances. Begin by calculating the cash balance. (Round amounts to the nearest whole dollar.)

Cash
Beginning balance
Cash inflows:
Cash sales
Collections
Cash outflows:
Payment of May liabilities
Cash purchases
Payments for April (credit) purchases
Purchase of equipment
Operating expenses paid
Ending balance

Part 9

Calculate the inventory balance. (Round amounts to the nearest whole dollar.)

Inventory
Beginning balance
Add:
Purchases
Less:
Cost of goods sold
Ending balance

Part 10

Calculate the owners' equity balance. (Round amounts to the nearest whole dollar.)

Owners' Equity
Beginning balance
Add:
Revenues
Less:
Expenses
Ending balance

Part 11

Prepare the budgeted balance sheet for Chair Medical Supply at April 30.

	Chair Medical Supply
	Budgeted Balance Sheet
	April 30

Assets
Current assets:
Cash
Accounts receivable
Inventory
Total current assets
Plant assets:
Equipment
Accumulated depreciation
Total assets

Part 12

Liabilities
Current liabilities:
Accounts payable
Accrued expenses payable
Total liabilities
Owners' Equity
Owners' equity
Total liabilities and owners' equity

Part 13

b. Suppose Chair Medical Supply has a minimum desired cash balance of $17,000. Will the company need to borrow cash in April?

The company			have to borrow cash in April if sales revenue is $60,667. The company's cash balance is
	than the minimum balance of $17,000.

a.	March 31 equipment balance, $52,700; accumulated depreciation, $41,700.
b.	April capital expenditures of $42,800 budgeted for cash purchase of equipment.
c.	April depreciation expense, $400.
d.	Cost of goods sold, 40% of sales.
e.	Other April operating expenses, including income tax, total $13,000, 20% of which will be paid in cash and the remainder accrued at April 30.
f.	March 31 owners' equity, $92,500.
g.	March 31 cash balance, $40,300.
h.	April budgeted sales, $91,000, 70% of which is for cash. Of the remaining 30%, half will be collected in April and half in May.
i.	April cash collections on March sales, $29,000.
j.	April cash payments of March 31 liabilities incurred for March purchases of inventory, $17,600.
k.	March 31 inventory balance, $29,800.
l.	April purchases of inventory, $10,800 for cash and $36,900 on credit. Half of the credit purchases will be paid in April and half in May.