Data: Chapa Company, a sporting goods merchandising firm, prepares its master budget on a quarterly basis. The following data have been assembled to assist in the preparation of the master budget for the third quarter of 2021. The firm is particularly interested in its cash position over the next few months since it is considering a major loan to expand its business.

\fPP- F?\" be. :- Actual sales for June 2021 were $600,000. Budgeted sales for July 2021 through October 2021 are as follows: July $200,000 August 800,000 September 875,000 October 525,000 Sales are 40% for cash and 60% on credit. 50% of each month' s credit sales are collected in the month of sale and the remaining 50% is collected in the month after sale. Therefore, the balance of $130,000 for Accounts Receivable on the June 30, 2021 balance sheet is $600,000 June sales x 60% credit sales 3: 50% collected in month after sale. The company's budgeted cost of goods sold is 70% of budgeted sales. Monthly expenses are budgeted as follows: salaries and wages, $20,000 per month plus 15% of sales; shipping, 3% of sales; advertising, $10,000 per month; depreciation, $4,000 per month. At the end of each month, management desires inventory on hand to be equal to 20% of the following month's sales, stated at cost. Inventory purchases are all on credit. 70% of each month's purchases are paid for in the month of purchase and the remaining 30% is paid for in the month after purchase. Land purchases during the quarter are expected to be as follows: July, $135,000; September, $120,642. Dividends totaling $25,000 are expected to be declared and paid in September. The company must maintain a minimum cash balance of$25,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of the month and all repayments of principal are made at the end of a month. Interest is repaid only at the time of repayment of principal and is accrued between the time the borrowing is made and the principal is repaid. The annual interest rate is 12% and interest is calculated to the nearest whole month (e.g., 1tl2, 2t 12, etc.) and rounded to the nearest penny. 1. Schedule of Expected Cash Collections: JUL AUG SEP 3Q Collection of Cash Sales $280,000 Credit Sales: Collected Month of Sale 210,000 Collected Month after Sale 180,000 Total Collections $670.000 2. Inventory Purchases Budget: JUL AUG SEP 30 Budgeted Cost of Goods Sold $490,000 Add Desired Ending Inventory 112,000 Total Inventory Needs $602,000 Deduct Beginning Inventory 140,000 Total Purchases $462.000 3. Schedule of Cash Disbursements - Inventory Purchases: JUL AUG SEP 3Q Inventory Purchases: Paid Month of Purchase $323,400 Paid Month after Purchase 126,000 Total Cash Disbursements $449.400 Schedule of Cash Disbursements - Operating Expenses: JUL AUG SEP 3Q Operating Expenses: Salaries and Wages $125,000 Shipping 21,000 Advertising 10,000 Total Cash Disbursements $156.000Cash Budget: JUL AUG SEP BQ Cash Balance, Beginning 5 25,000 Add Cash Collections 670 000 Total Cash Available $245 000 Less lCash Disbursements: For Inventory Purchases 449,400 For Operating Expenses 156,000 For Land Purchases 135,000 For Dividends 0 Total Cash Disbursements $740 400 Excess (Deciency) of Cash $ 4,600 Financing: Borrowed from Bank 3 20,400 Principal Repayment 0 Interest Paid 0 Cash Balance, Ending 3 25 000 In the Financing section, recall that all borrowings are made at the beginning of the month and all principal repayments are made at the end of the month. Interest is only paid for the amount accrued at the time of a principal repayment. However, interest expense and interest payable will need to be recognized in the interim. Income Statement: On a separate page in your PDF le or a separate PDF le, prepare a Budgeted Income Statement for the third quarter ended on September 30, 2021 using good form (heading, titles, underlines, etc). The income statement must he prepared using the contribution margin approach as discussed in class. Be sure to list all individual variable costs and xed costs within those sections. Balance Sheet: Prepare a Budgeted Balance Sheet as of September 30, 2021 using good form {i.e., the same format shown on the rst page of the project). You can have the balance sheet on the same page as the income statement or on a separate page in your PDF le. Written Analysis: Assume you are the chief executive ofcer for Chapa Company and you have been presented with the budget you prepared in the above steps. On a separate page of your PDF le or in a separate PDF le, prepare a short report to your stockholders describing how you feel the company is expected to perform for the third quarter of 202 1. Your analysis should be professionally written with no grammatical or typographical errors. Check Figures Schedule of Cash Collections: Total Cash Collections for Quarter $2,292,500 Inventory Purchases Budget: Total Purchases for Quarter $1,596,000 Schedule of Cash Disbursements - Inventory Purchases: Total Cash Disbursements for lQuarter $1,552,950 Schedule of Cash Disbursements - Operating Expenses: Total Cash Disbursements for lQuarter $5 12,500 $9,000 $235,000 $132,502 Cash Budget: Borrowed from Bank in September Budgeted Income Statement: Contribution Margin Budgeted Income Statement: Net Income Budgeted Balance Sheet: Total Assets $954,642

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