Garden Sales, Inc. December 31, 2017 21,315 Cash Accounts Receivable Inventory Prepaid Rent $ s $ $ 60,000 112.500 71,050 12,000 Account Payable $ Working Capital Line $ Accrued interest Payable $ Note Payable $ 50,000 Prop, Plant & Equip Actum Depr s $ Net PP&E $ 900.000 (100,000 800,000 Common Stock Retained Earnings s 5 200,000 784,235 Total Assets $ 1.055,550 1,055,550 . . . 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 $1,500 each month, beginning January through April. Cost of Sales represents 70% of sales, each month. Cash Operating Expenses are 15% of sales, exclusive of Depreciation expense Depreciation Expense is $8,000, per month and prepaid rent is amortized at $1,000 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, $7,500 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 In March, the company is planning on replacing an outdated machine.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 $15,000. The old machine originally cost $20,000 with a Net Book Value of 15,000 and will be sold for $6,000 The Company does not pay or accrue for taxes until the end of December The Company plans to pay a cash dividend of $8,000 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 $10,000, plus interest of $250, 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 $75,000 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) 4. Assignment must be turned in as HAND WRITTEN document. Check Figures for 03/31 Retained Earnings: $778,549.42 Total Assets: $1,051,200.00 . . . PLEASE READ CAREFULLY Thank You
