Garden Sales, Inc. December 31, 2017 25,740.00 Cash Accounts Receivable Inventory Prepaid Rent $ $ $ $ 40.000.00 105,000.00 63,150.00 12,000.00 Account Payable Working Capital Line Accrued interest Payable Note Payable $ S 3 $ 50,000.00 Prop, Plant & Equip Accum Depr $ $ 5 5 Net PPRES 200,000.00 744.410.00 Common Stock Retained Earnings 900,000.00 (100,000.00 800,000.00 Total Assets $1,020,150.00 $ 1,020,150.00 You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and carings 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 $3,000 each month, beginning January through April Cost of Sales represents 60% of sales, each month. Cash Operating Expenses are 13% of sales, exclusive of Depreciation expense Depreciation Expense is $2,300, per month and prepaid rent is amortized at $600 per month of the month's sales, 30% 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. To maintain sufficient inventory, the company purchases 100% of the next month's cost of sales. They pay for 60%, in cash, in the month they purchase and pay the remaining 40% in the following month. In March, the company is planning on replacing an outdated machine. The new machine will cost $35,000. The old machine originally cost $15,000, with a Net Book Value of $5,000 and will be sold for $1,900. 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 $750, 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 $60,000 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 1.5% 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 cach 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 Total Interest Exp: (3mo) S584.63 Total Assets: S1.052,000.00
