Individual Student Project

Grading Criteria:

The project will be graded for accuracy, completeness, formatting, and in accordance with the following:

• This project may be done only in Microsoft Excel (preferred) or Microsoft Word (table or otherwise).
• Project must be completely typewritten and submitted to me by the due date and via the attachment feature in blackboard. No email submittals will be accepted for whatever reason. Any email submittal will receive a grade of zero. Any handwritten submittal (part or whole) will also receive a grade of zero.
• Maximum allowable grade points: 10 (see next bullet)
• Points will be deducted for any sloppy, poor, unaligned, unprofessional format: -5 points max.

I will be looking at alignment of numbers; use of comma separators; underlining appropriately when adding, subtracting, etc.; dollar signs on column headings, etc.; In other words, I'm looking for a professional presentation. I do not want to see dollar signs on every number in a column. Only at end of calculated values, and column headings.

As such, while you may get the correct numerical values, you will get less than 10 for poor formatting.

Do not send me any preview copy to see if you're done correctly. Believe in your abilities.

• Points deducted for any late submittal: -1 per day or portion thereof.

Instructions

Following the above grading criteria and the information below, prepare the following:

• A cash collection schedule for July and August.
• A cash payment (disbursement) schedule for inventory purchases in July and August.
• A cash budget for July and August.

Case Parameters:

A company expects sales revenues as follows:

June July August

Credit sales $135,000 $125,000 $ 90,000

Cash sales 90,000 255,000 195,000

Total sales $225,000 $380,000 $285,000

Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:

June $300,000

July 240,000

August 105,000

Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash.

The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month.