https://www.chegg.com/homework-help/questions-and-answers/cells-filled-correct-please-fill-others-explain-necessary-purchases-budget-december-januar-q40942907?trackid=vorAN3ie
Complete the first three lines of the summary cash budget. Then do the analysis of short-term financing needs in requirement (6). Then finish requirement (5).
| | 20x1 |
| | January | February | March | 1st Quarter |
| Cash Receipts (from part 2) | | | | |
| Less: Cash disbursements (from part 4) | | | | |
| Change in cash balance during period due to operations | | | | |
| Sales of marketable securities (1/2/x1) | | | | |
| Proceeds from bank loan (1/2/x1) | | | | |
| Purchase of equipment | | | | |
| Repayment of bank loan (3/31x1) | | | | |
| Interest on bank loan | | | | |
| Payment of dividends | | | | |
| Change in cash balance during 1st Quarter | | | | |
| Cash balance, 1/1/x1 | | | | |
| Cash balance 1/31/x1 | | | | |
| | | | | |
Calculation of required short-term borrowing.
| Projected cash balance as of Dec 31, 20x0 | |
| Less: Minimum cash balance | |
| Cash available for equipment purchases | |
| Projected proceeds from sales of marketable securities | |
| Cash available | |
| Less: cost of investment in equipment | |
| Required short term borrowing | |
Prepare Global Electronics budgeted income statement for the first quarter of 20x1. (Ignore income taxes.)
| GLOBAL ELECTRONIC COMPANY |
| Budgeted Income Statement |
| For the First Quarter of 20x1 |
| Sales Revenue | | |
| Less: Cost of Goods Sold | | |
| Gross Margin | | $ |
| Selling and administrative expenses: | -- | -- |
| Sales Salaries | | |
| Sales commissions | | |
| Advertising and promotion | | |
| Administrative salaries | | |
| Depreciation | | |
| Interest on bonds | | |
| Interest on short-term bank loan | | |
| Property Tax | | |
| | | |
| Total selling and administrative Expenses | | |
| Net Income | | |
Required Information The following information applies to the questions dlisplayed below.] "We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down st MetroBank. This statement by Beth Davies-Lowry, president of Intercosstsl Electronics Company, concluded a meeting she had called with the firm's top management. Intercostal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast She believes the company's sales during the first quarter of 20x1 will increase by 10 percent esch month over the previous month's sales. Then Wiilcox expects sales to remain constant for several months. Intercosstal's projected balance sheet as of December 31, 20x0, is as follows: Cash 45,eee 252,eee 15,eee 264,eee 632,0ee Accounts receivable Marketable securities Inventory Buildings and equipment (net of accurulated depreciation) $1,288,eee Total assets Accounts payable Bond interest payable roperty ts abl Bonds payable (15%; due in 28x6) Cormon stock Retained earnings Total liabilities and stockholders equity 252,ee0 18,75e 4,88e , see,eee 132.450 $1,288,eee Jack Hanson, the assistant controller, is now preparing a momthly budget for the first quarter of 20x1. In the process, the following information has been accumulated: 1. Projected sales for December of 20x0 are $600,000. Credit sales typically are 60 percent of total soles. Intercoastal's credit experience indicates that 30 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month 2. Intercoastal's cost of goods sold generally runs at 80 percent of soles. Inventory is purchased on account, and 50 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercosstal's other monthly expenses will be as follows: Sales salaries $19,eee Advertising and pronotion Administrative salaries Depreciation Interest on bonds operty ts 12,eee 19,eee 15,eee 3,75e 1,2ee In addition, sales commissions run at the rate of 3 percent of sales. 4. Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $105,000 in an automated inventory- handling system to control the movement of inventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balsence of $15,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest retes will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercosstal's board of directors has indicated an intention to declare and pay dividends of $20,000 on the last day of each quarter. 6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on lIntercosstal's bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on February 28 and August 31for the preceding six-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements Required Information The following information applies to the questions dlisplayed below.] "We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down st MetroBank. This statement by Beth Davies-Lowry, president of Intercosstsl Electronics Company, concluded a meeting she had called with the firm's top management. Intercostal is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast She believes the company's sales during the first quarter of 20x1 will increase by 10 percent esch month over the previous month's sales. Then Wiilcox expects sales to remain constant for several months. Intercosstal's projected balance sheet as of December 31, 20x0, is as follows: Cash 45,eee 252,eee 15,eee 264,eee 632,0ee Accounts receivable Marketable securities Inventory Buildings and equipment (net of accurulated depreciation) $1,288,eee Total assets Accounts payable Bond interest payable roperty ts abl Bonds payable (15%; due in 28x6) Cormon stock Retained earnings Total liabilities and stockholders equity 252,ee0 18,75e 4,88e , see,eee 132.450 $1,288,eee Jack Hanson, the assistant controller, is now preparing a momthly budget for the first quarter of 20x1. In the process, the following information has been accumulated: 1. Projected sales for December of 20x0 are $600,000. Credit sales typically are 60 percent of total soles. Intercoastal's credit experience indicates that 30 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month 2. Intercoastal's cost of goods sold generally runs at 80 percent of soles. Inventory is purchased on account, and 50 percent of each month's purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold. 3. Hanson has estimated that Intercosstal's other monthly expenses will be as follows: Sales salaries $19,eee Advertising and pronotion Administrative salaries Depreciation Interest on bonds operty ts 12,eee 19,eee 15,eee 3,75e 1,2ee In addition, sales commissions run at the rate of 3 percent of sales. 4. Intercoastal's president, Davies-Lowry, has indicated that the firm should invest $105,000 in an automated inventory- handling system to control the movement of inventory in the firm's warehouse just after the new year begins. These equipment purchases will be financed primarily from the firm's cash and marketable securities. However, Davies-Lowry believes that Intercoastal needs to keep a minimum cash balsence of $15,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest retes will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible. 5. Intercosstal's board of directors has indicated an intention to declare and pay dividends of $20,000 on the last day of each quarter. 6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on lIntercosstal's bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on February 28 and August 31for the preceding six-month period. Required: Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements
