Garden Sales, Inc. December 11, 2017 Cash $ 50,000.00 Account Payable $ 22,005.00 Accounts Receivable $ 135,000.00 Working Capital Line Inventory $ 73,350.00 Accrued Interest Payable 5 Prepaid Rent $ 12.000.00 Note Payable 5 50,000.00 Prop, Plant & Equip 5 900,000.00 Common Stock S 200,000.00 Accum Depr $ (100,000.00) Net PP&E S 800,000.00 Retained Earnings $ 798,345,00 Total Assets $ 1,070,350.00 1,070.350.00 You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and earnings budget/forecast and Pro-Forma Balance Sheet and Income Statement for the next quarter. After your discussion with the various departments, you have come up with the following information/assumptions: November 2017 and December 2017 sales were $100,000, each month Sales for the following three months will decrease by $2,200 each month, beginning January through April. . Cost of Sales represents 75% of sales, each month. . . . . . . . . Cash Operating Expenses are 14% of sales, exclusive of Depreciation expense Depreciation Expense is $4,000, per month and prepaid rent is amortized at $750 per month Of the month's sales, 10% is collected as cash with the remaining placed on customer's account. Customer's accounts are usually paid off over a 2 month period (50% each month) beginning the month following the sale The CFO just informed you that one customer has filed bankruptcy therefore, $1,000 from Nov A/R Sales will be written off in Jan to Bad Debt Exp. To maintain sufficient inventory, the company purchases 100% of the next month's cost of sales. They pay for 70%, in cash, in the month they purchase and pay the remaining 30% in the following month. In March, the company is planning on replacing an outdated machine. The new machine will cost $14,000. The old machine originally cost $20,000 with a Net Book Value of 15,000 and will be sold for $5,000 The Company does not pay or accrue for taxes until the end of December. The Company plans to pay a cash dividend of $6,500 at the end of March. Assume all operating expenses incurred during the month are paid, in cash, during the same month incurred The Note Payable requires a principal payment of $9,000, plus interest of $750, at the end of March. For this note, no interest is Accrued/Expensed until interest is paid The minimum cash month end balance required according to the bank agreement is $75,000 for any given month beginning Jan 30, 2018. A working capital line of credit is available, up to $25,000, and if needed, money is taken out at the beginning of the month. Interest is %% per month. Interest is paid on the working capital line when principal payments are paid on the debt; at the end of any given month. Interest is accrued on the working capital line effective the beginning of the month when money is received. 1. Prepare a detailed Cash Budget/Forecast for each month of Jan, Feb and March, 2018 2. Prepare an Income Statement for the 3-month period ending March 2018 (in good form) 3. Prepare a Balance Sheet as of March 31, 2018 (in good form) 4. Assignment must be turned in as HAND WRITTEN document and include this sheet. Check Figures for 03/31 Retained Earnings: $797,229.74 Total Assets: $1,067.230.00