Garden Sales, Inc. December 31, 2017 Cash $ 40,000 Account Payable 5 23,250 Accounts Receivable $ 112,500 Working Capital Line S Inventory $ 57,000 Note Payable $ 50,000 Prepaid Rent S 12,000 $ 500,000 Common Stock $ 200,000 Prop, Plant & Equip Accum Depr $ Retained Earnings $ 748,220 (100,000) 800,000 Net PP&E S Total Assets 1,021.500 $ 1,021,500 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 $3,000 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 $10,000, per month and prepaid rent is amortized at $3,000 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, $15,000 from Nov A/R Sales will be written of in Jan to Bad Debt Exp. . 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 In March, the company is planning on replacing an outdated machine.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 machin originally cost $15,000, with a Net Book Value of $5,000 and will be sold for $3,000, . The Company does not pay or accrue for taxes until the end of December. The Company plans to pay a cash dividend of $30,000 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 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 Total Interest Exp: (3mo) $991.91 Total Assets: $1,018,100.00