Garden Sales, Inc. December 31, 2017 18,720 Cash Accounts Receivable Inventory Prepaid Rent S S s $ 60,000 112,500 62.400 12.000 Account Payable Working Capital Line Note Payable $ $ $ 50,000 Prop, Plant & Equip Accum Depr $ $ Net PP&E S 900,000 (100,000) 800,000 Common Stock Retained Earnings $ $ 200,000 778,180 Total Assets $ 1.046.900 $ 1,046,900 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 increase by $4,000 each month, beginning January through April. Cost of Sales represents 60% of sales, each month. Cash Operating Expenses are 10% of sales, exclusive of Depreciation expense Depreciation Expense is $7,500, per month and prepaid rent is amortized at $2,000 per month of the month's sales, 25% 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, $10,000 from Nov A/R Sales will be written off in Jan to Bad Debt Exp. 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 in March, the company is planning on replacing an outdated machine.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 $30,000. The old machine originally cost $25,000 with a Net Book Value of $10,000 and will be sold for $7,500 The Company does not pay or accrue for taxes until the end of December. The Company plans to pay a cash dividend of $15,000 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 $5,000, plus interest of $500, at the end of March. For this note, no interest is Accrual/Expense until interest is paid The minimum cash month end balance required according to the bank agreement is $80,000 for any given month beginning Jan 30, 2018. A working capital line of credit is available, up to $100,000, and if needed, money is taken out at the beginning of the month. Interest is 1% 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 (good form) 3. Prepare a Balance Sheet as of March 31, 2018 (good form) Check Figures for 03/31 Total Equity: $813,620.30 Total Assets: $1,087,600.00