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 expects the following Selling and Administrative Expenses

Salaries $ 15,000

Rent $ 17,000

Advertising $ 82,000

Depreciation $ 18,500

Other $ 6,700

Sales Commissions $ 1.50 Per Unit

Interest 12% annual rate. Paid on last months ending balance of Credit Line

1. I need to prepare Selling and Administrative Budget

2. I need to prepare capital expenditures budget

3. I need to prepare cash budget

4. I need to know 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?

5. Prepare budgeted Income Statement

(Cost of Goods Sold should be calculated based on estimated costs of production for the quarter.)