estimate income statement for the second and third quarter. calculate accounts receivable monthly. find expected cash balance on September 30. make an estimated balance sheet showing the expected financial position at September 30.
CORPORATION FINANCE EASY TURN TOY COMPANY Easy-Turn is a company that manufactures and sells a particular type of toy to manufacturers. It has been in business three months and finds itself with more orders taken than it has the funds to produce the goods on order. The company realizes that it must find a source?f financing and convince this s urce that the company has a bright future and that a good source of short- term credit would be the missing ingredient to make this company a success The company's sales for the first quarter have been 20,000 for January, 30,000 units for February, and 40,000 units for March The selling price of the good is s3 per unit and is sold to its customers offering a discount if paid within the period from sale to the end of month or net 60 days, 60% of each month expected to be collected in the month following the sale and 8% of each month's sales are expected to be collected in the 2nd month following the sale. Credit terms are not expected to change in the next year from the present credit policy. sales are The relationship between factory costs and the rate of output are indicated in the operating statement. Inventories of finished goods, however, are always valued at a "normal cost" of S2.10 per unit, that is, $2 per unit variable and $.10 per unit fixed. The S. 10 per unit fixed is a figure based on the entire year's production and not one quarter Expected Unit Sales and Production for the next 6 months: Sales Producti April May June July August September 30,000 40,000 50,000 50,000 60,000 70,000 April May June July August September 50,000 60,000 60,000 70,000 80,00 90,000 Materials are purchased each month for production and they are paid in the month in which they are purchased. A safety stock of raw materials is kept on hand to furnish a 30,000 unit production if needed. Cost of supplies and miscellaneous variable and fixed factory costs are paid in the month in which those costs are incurred Direct lab r, indirect labor , and supervision costs make up the total factory payroll. These, as well as selling commissions and expense and all administration costs, are paid half in the month in which they are incurred, half in the following month. Power bills are paid in full in the month after they are incurred Property taxes are paid quarterly and a disbursement of $3,000 will be made for these in April and July. CORPORATION FINANCE EASY TURN TOY COMPANY Easy-Turn is a company that manufactures and sells a particular type of toy to manufacturers. It has been in business three months and finds itself with more orders taken than it has the funds to produce the goods on order. The company realizes that it must find a source?f financing and convince this s urce that the company has a bright future and that a good source of short- term credit would be the missing ingredient to make this company a success The company's sales for the first quarter have been 20,000 for January, 30,000 units for February, and 40,000 units for March The selling price of the good is s3 per unit and is sold to its customers offering a discount if paid within the period from sale to the end of month or net 60 days, 60% of each month expected to be collected in the month following the sale and 8% of each month's sales are expected to be collected in the 2nd month following the sale. Credit terms are not expected to change in the next year from the present credit policy. sales are The relationship between factory costs and the rate of output are indicated in the operating statement. Inventories of finished goods, however, are always valued at a "normal cost" of S2.10 per unit, that is, $2 per unit variable and $.10 per unit fixed. The S. 10 per unit fixed is a figure based on the entire year's production and not one quarter Expected Unit Sales and Production for the next 6 months: Sales Producti April May June July August September 30,000 40,000 50,000 50,000 60,000 70,000 April May June July August September 50,000 60,000 60,000 70,000 80,00 90,000 Materials are purchased each month for production and they are paid in the month in which they are purchased. A safety stock of raw materials is kept on hand to furnish a 30,000 unit production if needed. Cost of supplies and miscellaneous variable and fixed factory costs are paid in the month in which those costs are incurred Direct lab r, indirect labor , and supervision costs make up the total factory payroll. These, as well as selling commissions and expense and all administration costs, are paid half in the month in which they are incurred, half in the following month. Power bills are paid in full in the month after they are incurred Property taxes are paid quarterly and a disbursement of $3,000 will be made for these in April and July
