Data Section Actual and Budgeted Unit Sales January February March April May June July August September Balance Sheet, March 31 Assets Case Study Week 5 Master Budget 20,000 26,000 40,000 65,000 100,000 50,000 30,000 28,000 25,000 Cash $ 74,000.00 Accounts receivable ($26,000 February sales; $320,000 March sales) 346,000.00 Inventory Prepaid Insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings 104,000.00 21,000.00 950,000.00 $ 1,495,000.00 $ 100,000.00 15,000.00 800,000.00 580,000.00 Total liabilities and stockholders' equity $1,495,000.00 40% 2/6 Other Data Average selling price $ 10.00 Average purchase cost per unit $ 4.00 Desired ending inventory (% of next month's unit sales) Collections from customers: Collected in month of sale 20% Collected in month after sale 70% Collected two months after sale 10% Disbursements to suppliers: Paid in month of purchase 50% Paid in month after purchase 50% Projected cash payments: Variable expenses Fixed expenses (per month) 4% of sales $ 331,000.00 Answer Section (numbers highlighted in yellow are check figures) 1) a. Sales Budget: April May June Units Selling price per unit $ Total budgeted sales $ 65,000? 10.00 ? 650,000.00 ? ? ? ? b. Expected Cash Collections: April May June February Sales $ March Sales 26,000.00 280,000.00 ? April Sales 130,000.00 ? ? May Sales ? P June Sales Total cash collections c. Merchandise Purchase Budget: $ 436,000.00 $ 695,000.00 $ ? 2/6 April May June Sales in units Add: Closing inventory in units 65,000 40,000 ? Total needs 105,000 ? Less: Opening inventory in units (26,000) ? ? Required Purchase Units Price paid per earrings 79,000 4.00 ? ? ? Total purchases $ 316,000.00 $ 320,000.00 $ 168,000.00 d. Schedule of Expected Cash Disbursements Accounts Payable (March) April purchases May purchases April $ May 100,000.00 158,000.00 ? ? June ? June purchases Total cash payment to suppliers $ 258,000.00 $ 318,000.00 $ 244,000.00 2) Cash Budget Opening cash balance April $ May June 74,000.00 ? ? Add: Receipts Collection from Customers 436,000.00 ? ? Total Cash Available 510,000.00 ? ? Less: Disbursements Cash Disbursement - Accounts Payable Selling & Admin Expenses 258,000.00 357,000.00 ? ? ? ? Purchase of equipment ? Dividend Paid Total Disbursements Closing Cash Balance 15,000.00 630,000.00 (120,000.00) 3/6 ? Add: Finance from bank 170,000.00 10,000.00 Less: Payment to bank Less: Payment of interest - bank loan (5,300.00) Net Closing Cash Balance $ 50,000.00 ? ? 3) Budgeted Income Statement For the Quarter Ending June 30 Sales ? Less: Variable Cost Cost of Goods Sold Sales Comm. - 4% of Sales Contribution ? ? Less: Fixed Cost Advertising P Rent ? Salary Expense ? Utilities ? Insurance P Depreciation Operating Profit Less: Interest Expense Net Income ? ? ? ? $ 154,700.00 Data Section Actual and Budgeted Unit Sales January February March April May June July August September Balance Sheet, March 31 Assets Case Study Week 5 Master Budget 20,000 26,000 40,000 65,000 100,000 50,000 30,000 28,000 25,000 Cash $ 74,000.00 Accounts receivable ($26,000 February sales; $320,000 March sales) 346,000.00 Inventory Prepaid Insurance Property and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Dividends payable Common stock Retained earnings 104,000.00 21,000.00 950,000.00 $ 1,495,000.00 $ 100,000.00 15,000.00 800,000.00 580,000.00 Total liabilities and stockholders' equity $1,495,000.00 40% 2/6 Other Data Average selling price $ 10.00 Average purchase cost per unit $ 4.00 Desired ending inventory (% of next month's unit sales) Collections from customers: Collected in month of sale 20% Collected in month after sale 70% Collected two months after sale 10% Disbursements to suppliers: Paid in month of purchase 50% Paid in month after purchase 50% Projected cash payments: Variable expenses Fixed expenses (per month) 4% of sales $ 331,000.00 Answer Section (numbers highlighted in yellow are check figures) 1) a. Sales Budget: April May June Units Selling price per unit $ Total budgeted sales $ 65,000? 10.00 ? 650,000.00 ? ? ? ? b. Expected Cash Collections: April May June February Sales $ March Sales 26,000.00 280,000.00 ? April Sales 130,000.00 ? ? May Sales ? P June Sales Total cash collections c. Merchandise Purchase Budget: $ 436,000.00 $ 695,000.00 $ ? 2/6 April May June Sales in units Add: Closing inventory in units 65,000 40,000 ? Total needs 105,000 ? Less: Opening inventory in units (26,000) ? ? Required Purchase Units Price paid per earrings 79,000 4.00 ? ? ? Total purchases $ 316,000.00 $ 320,000.00 $ 168,000.00 d. Schedule of Expected Cash Disbursements Accounts Payable (March) April purchases May purchases April $ May 100,000.00 158,000.00 ? ? June ? June purchases Total cash payment to suppliers $ 258,000.00 $ 318,000.00 $ 244,000.00 2) Cash Budget Opening cash balance April $ May June 74,000.00 ? ? Add: Receipts Collection from Customers 436,000.00 ? ? Total Cash Available 510,000.00 ? ? Less: Disbursements Cash Disbursement - Accounts Payable Selling & Admin Expenses 258,000.00 357,000.00 ? ? ? ? Purchase of equipment ? Dividend Paid Total Disbursements Closing Cash Balance 15,000.00 630,000.00 (120,000.00) 3/6 ? Add: Finance from bank 170,000.00 10,000.00 Less: Payment to bank Less: Payment of interest - bank loan (5,300.00) Net Closing Cash Balance $ 50,000.00 ? ? 3) Budgeted Income Statement For the Quarter Ending June 30 Sales ? Less: Variable Cost Cost of Goods Sold Sales Comm. - 4% of Sales Contribution ? ? Less: Fixed Cost Advertising P Rent ? Salary Expense ? Utilities ? Insurance P Depreciation Operating Profit Less: Interest Expense Net Income ? ? ? ? $ 154,700.00