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Freda's Phones Inc. is a mobile phone retailer. The company is planning its cash needs for the month of January 2023. The statement of financial
Freda's Phones Inc. is a mobile phone retailer. The company is planning its cash needs for the month of January 2023. The statement of financial position showed the following at December 31, 2022. Other information: \begin{tabular}{|c|c|c|} \hline a. & Cash collection & \\ \hline i. & November credit sales & $0 \\ \hline ii. & December credit sales & $550,000 \\ \hline iii. & % cash sales each month & 20% \\ \hline iv. & % credit sales collected in same month & 40% \\ \hline v. & % credit sales collect in next month & 60% \\ \hline vi. & % credit sales collected in second month & 0% \\ \hline b. & January total sales & $500,000 \\ \hline c. & Inventory information & \\ \hline i. & February total sales & $450,000 \\ \hline ii. & Gross profit ratio January & 60% \\ \hline iii. & Gross profit ratio February & 60% \\ \hline iv. & % purchases paid in cash same month & 20% \\ \hline v. & % inventory on hand needed for next month's sales & 60% \\ \hline d. & \begin{tabular}{l} Accounts payable at Dec. 31 all relate to inventory \\ purchases and will be paid in full in January \end{tabular} & \\ \hline e. & Variable expenses as % of total sales, paid each month & 30% \\ \hline f. & Fixed expenses & \\ \hline i. & \begin{tabular}{l} Depreciation, including January budgeted PPE \\ purchases \end{tabular} & $40,000 \\ \hline ii. & Other fixed operating expenses, paid each month & $30,000 \\ \hline g. & \begin{tabular}{l} Interest rate per month \\ Interest is paid monthly on opening balances of the \\ operating loan and non-current debt. \end{tabular} & 1% \\ \hline h. & \begin{tabular}{l} Corporate income tax rate. \\ Income taxes are paid at the end of the fiscal year. \end{tabular} & 25% \\ \hline i. & Monthly cash dividends paid to shareholders & $5,000 \\ \hline j. & Budgeted PPE purchases for January & $15,000 \\ \hline k. & January repayments of principal on non-current debt & $25,000 \\ \hline l. & Desired cash balance at end of January & $20,000 \\ \hline m. & Maximum operating loan balance at end of January is & $200,000 \\ \hline n. & \begin{tabular}{l} Any excess cash will be used to pay down the \\ operating loan. \end{tabular} & \\ \hline o. & \begin{tabular}{l} Any needed cash will be raised by issuing common \\ shares. \end{tabular} & \\ \hline \end{tabular} Required: 1. (19 marks) Using a format like the budget worksheet on the following page, record the above information. 2. (8 marks) Prepare a statement of financial position at January 31,2023 and budgeted income statement, statement of changes in equity, and statement of cash flows for the month ended January 31, 2023. Show all calculations. For SCF purposes, assume the operating loan is part of cash and cash equivalents. 3. (2 marks) Apprise management of budgeted January operating loan needs
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