. E The Sweetwater Candy Company is preparing its budget for next year and has asked you to prepare a cash budget for the first quarter (January-March) of next year. Information needed for the cash budget is listed below in the gray box. The requirements are further below in the 1 green box. 2 3 . Selling price for a single box of chocolates: $25 per unit 4 5 Budgeted total sales are: 40% cash sales 60% credit sales 1 19 9 Credit sales are collected in cash as follows: 10 75% collected in the month following the sale 11 25% collected in the 2nd month following the sale 12 13 At December 31, the balance in Accounts Receivable is $10,125, which represents 14 the uncollected portions of the November and December sales. 15 November total sales 700 units 16 December total sales 500 units 17 18 Budgeted sales for the next four months follow: January February March April 20 Sales in units 1,200 1,000 1,600 1,400 21 22 The company desires merchandise inventory equal to 30% of the next 23 month's sales in units. 24 25 The December 31 balance of merchandise inventory is 340 units, and the cost 26 to purchase one box of chocolates is $10 per unit. 27 28 Inventory purchases are paid in cash as follows: 29 40% paid in the month of purchase 30 60% paid in the month following purchase 31 32 At December 31, the balance of Accounts Payable is $8,000, which represents 33 the unpaid portion of December's purchases. 34 37 39 DE 31 32 At December 31, the balance of Accounts Payable is $8,000, which represents 33 the unpaid portion of December's purchases. 34 35 Operating expenses that require payment are paid in the month incurred. 36 Operating expenses include: Sales commissions are 10% of sales. 38 Shipping is 2% of sales. Office salaries are $2,400 per month. 40 Rent is $4,800 per month. 41 Depreciation expense is $4,000 per month. 42 43 . In March, management expects to sell office equipment that originally cost 44 $12,000 at a gain of $1,500. Accumulated depreciation on this equipment at the 45 time of sale will be $7,000. The equipment will be sold for cash. 46 47 . In March, management plans to either overhaul its old delivery truck or 48 purchase a new truck. Based on the decision you made when you completed the 49 capital budgeting analysis, include the cash disbursement for the truck in March. 50 51 A minimum cash balance of $10,000 is required, and the cash balance at 52 December 31 is $10,200. 53 54 Loans are obtained at the end of a month in which a cash shortage occurs. 55 56 Interest is 12% annually (or 1% per month), based on the loan balance at the 57 beginning of the month, and must be paid each month. If an excess of cash 58 exists, loan repayments are made at the end of the month. At December 31, the loan balance is $0. 60 61 62 Required: 63 (A) Prepare the company's cash budget for each of the months of January, 64 February, and March that includes information on the loan balance. 65 Show the ending loan balance at December 31. 59 66 67 (B) Show supplemetary schedules for cash receipts from customers, purchases, and 68 cash disbursements for purchases. 69
