December of the previous year 70,000

January 20,000

February 80,000

March 80,000

April 30,000

Past experience shows that 45% of sales are collected in the month of the sale, and 55% in the month following the sale.

2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $35.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company policy that ending inventory should equal 45% of next months projected sales. All costs are paid in the current month except inventory purchases, which are paid in the month following the purchase (i.e. January purchases are paid in February).

3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $70,000, and this was the balance in the cash account on January 1^st. Other expenses include $35,000 per month for rent, $24,000 per month for advertising, and $66,000 per month for depreciation. In addition, variable Selling & Administrative cost is $12 per unit sold, and the company paid a $20,000 dividend in February.

The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month when borrowing is needed, and repayments are made at the end of a month if there is enough cash to make the payment. Also, interest associated with a loan is only paid at the time when that loan or a portion thereof is paid. Additionally, all loans and repayments (not the interest portion) can only be made in increments of $1000 and the company would like to pay its debts, or a portion thereof, as soon as it has enough cash to do so.

can you check it? and if there are something wrong, provide correct answers

Mijo Cash Budget For the first quarter ended March 2020 January 70,000 Quarter 1 February March $ 483,500 $ 149,500 $ Total 70,000 $ $ 2,375,000 $ 2.445,000 $2,350,000 $2,833,500 $4,000,000 $4.149.500 $8,725,000 $ 8.795.000 $2,800,000 $1,019,000 $ 6,107,500 $2,337,000 Beginning cash balance add cash receipts Cash collections from customers Total cash available Less cash disbursements Total cash disbursements for merchandise purchases Cash from Selling and administrative Dividend Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowing (at the beginnings of the month) Repayments (at end of the month) Interest Total financing Ending cash balance $ 1,662,500 $ 1,645,000 $ 299,000 $1,019,000 $ 20,000 $ 1,961,500 1 $ 2,684,000 $ 483,500 $ 149,500 $3,819,000 $ 330,500 $8,464,500 $ 330,500 $ $ $ - $ 483,500 $ 149,500 $ 330,500 $ 330,500 Mijo Budgeted Income Statement For the first quarter ended March 2020 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating Income Interest expense Net Income $9,000,000 $6,197,000 $2,803,000 $2,733,000 $ 70,000 $ - $ 70,000 Mijo Cash Budget For the first quarter ended March 2020 January 70,000 Quarter 1 February March $ 483,500 $ 149,500 $ Total 70,000 $ $ 2,375,000 $ 2.445,000 $2,350,000 $2,833,500 $4,000,000 $4.149.500 $8,725,000 $ 8.795.000 $2,800,000 $1,019,000 $ 6,107,500 $2,337,000 Beginning cash balance add cash receipts Cash collections from customers Total cash available Less cash disbursements Total cash disbursements for merchandise purchases Cash from Selling and administrative Dividend Total cash disbursements Excess (deficiency) of cash available over disbursements Financing Borrowing (at the beginnings of the month) Repayments (at end of the month) Interest Total financing Ending cash balance $ 1,662,500 $ 1,645,000 $ 299,000 $1,019,000 $ 20,000 $ 1,961,500 1 $ 2,684,000 $ 483,500 $ 149,500 $3,819,000 $ 330,500 $8,464,500 $ 330,500 $ $ $ - $ 483,500 $ 149,500 $ 330,500 $ 330,500 Mijo Budgeted Income Statement For the first quarter ended March 2020 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating Income Interest expense Net Income $9,000,000 $6,197,000 $2,803,000 $2,733,000 $ 70,000 $ - $ 70,000