E$-$Lan Electronics Budgeting Project

Step $3$

E$-$Lan Electronics expects the following as pertaining to the capital expenditures and cash budgets.

Capital Expenditures

The company plans to purchase selling and administrative equipment totaling $$180,000$

The company plans to purchase Production equipment totaling $$3,100,000$

Both will be purchased at the end of the March from operating cash flow and will not affect depreciation expense

for the first quarter.

Cash Budget

All sales are on credit. The company expects to collect $75\%$ of sales in the month of sale, $22\%$ of sales in the month

following the sale, $3\%$ percent will be uncollectable. Accounts receivable at the end of last year totaled $$1,980,000$

This represents the collectable amount of December sales.

The company give credit terms of $2/$ EOM, n$/$EOM second month

All direct materials purchases are on credit. The company expects to pay $70\%$ of purchases in the month of

purchase and $30\%$ the following month.

Accounts Payable to be paid in January is $$1,640,000$

The company has a credit line of $$3,000,000$ for operations with an interest rate of $12\%$ APR. At the end of every

month, the cash balance should be a minimum of $$50,000.$

The cash budget should include an estimate of amounts to be borrowed or returned to the credit line, and an

estimated balance of the credit line.

The Credit line has a balance at the end of December of $$362,000$

The company has good credit and can borrow funds on a secured basis at $4\%$ but has not done so$.$E$-$Lan Electronics Budgeting Project

Step$3($page $2)$

E$-$Lan Electronics expects the following Selling and Administrative Expenses

Prepare a Selling and Administrative Budget

Prepare a capital expenditures budget

Prepare a cash budget

What Problems exists in regards to the operating line? What is the cause? What should be done to remedy the

situation?

How much would it save the company going forward?

Prepare a budgeted Income Statement

$($Cost of Goods Sold should be calculated based on estimated costs of production for the quarter.$)$E$-$Lan Electronics Budgeting Project

Step $4$

Net Plant and Equipment as of December $31$ was Common Stock account Did not change Retained Earnings as of December $31$ was

$$7,800,000$

$$1,200,000$

$$8,575,191\mathrm{.}93$

Prepare the Budgeted Balance Sheet.

Check Figures

$\backslash$table$[[$Total Sales,$$33,069,400,],[$Total Raw Materials Purchased,$$12,058,693,],[$Total Direct Labor Cost $($March$),$$$3,924,720,],[$Budgeted Production Cost per Unit,$$3\mathrm{.}615,],[$Ending Finished Goods Inventory,$$785,237\mathrm{.}66,($Quarter$)],[$Total S&A Expenses,$$2,665,482,($Quarter$)],[$Total Financing,$$1,637,705,($End of March$)],[$Net Income,$$2,676,737,],[$Total Assets,$$15,237,707\mathrm{.}66,]]$E$-$Lan Electronics Budgeting Project

Step $3$

E$-$Lan Electronics expects the following as pertaining to the capital expenditures and cash budgets.

Capital Expenditures

The company plans to purchase selling and administrative equipment totaling $$180,000$

The company plans to purchase Production equipment totaling $$3,100,000$

Both will be purchased at the end of the March from operating cash flow and will not affect depreciation expense

for the first quarter.

Cash Budget

All sales are on credit. The company expects to collect $75\%$ of sales in the month of sale, $22\%$ of sales in the month

following the sale, $3\%$ percent will be uncollectable. Accounts receivable at the end of last year totaled $$1,980,000$

This represents the collectable amount of December sales.

The company give credit terms of $2/$ EOM, n$/$EOM second month

All direct materials purchases are on credit. The company expects to pay $70\%$ of purchases in the month of

purchase and $30\%$ the following month.

Accounts Payable to be paid in January is $$1,640,000$

The company has a credit line of $$3,000,000$ for operations with an interest rate of $12\%$ APR. At the end of every

month, the cash balance should be a minimum of $$50,000.$

The cash budget should include an estimate of amounts