INFORMATION FOR HEDRON, INC.

Hedron, Inc. is a company that re-sells one product, a particularly comfortable lawn chair. An overseas contractor makes the product exclusively for Hedron, so Hedron has no manufacturing related costs.

PRODUCT COSTS

In Nov of 2019, each lawn chair costs Hedron $4 per unit. Per an existing contract, the cost of each chair is scheduled to increase by 5% on May 1, 2020. In addition, because of increasing costs of plastic webbing, the cost is anticipated to increase by an additional 5% on Sept 1, 2020.

PRODUCT SALES

Hedron sells each chair for $10 per unit.

Projected Sales units:

Year	Month	Amt
2019	Nov	11,250
	Dec	11,600
2020	Jan	10,000
	Feb	11,400
	Mar	12,600
	Apr	15,000
	May	18,000
	Jun	22,000
	Jul	18,000
	Aug	18,000
	Sep	17,000
	Oct	16,500
	Nov	12,000
	Dec	12,500
2021	Jan	11,000

To offset increasing costs of the chairs, the company plans to raise the sales price to $11.25 per unit beginning Sept 1, 2020. The sales forecast (i.e., estimated sales in units) takes this price increase into account.

CREDIT SALES

Monthly sales are 30% cash sales, 70% credit sales. 30% of credit sales are collected in the month of sale, 50% are collected the following month, and 16% are collected the 2^nd month after sale. The remaining receivables are deemed uncollectible at the end of the 2^nd month after sale. Bad debts are written off in the month the debt is deemed uncollectible

PRODUCT INVENTORY

The firms policy regarding inventory is to maintain their stock (i.e. have in ending inventory) at 40% of the forecasted sales in units for the next month. Hedron uses the first-in, first-out (FIFO) method in accounting for inventories.

40% of the inventory purchases are paid in the month of purchase with the remaining 60% paid the following month.

EQUIPMENT

A Note payment of $50,000 for equipment previously purchased is due in January and another Note payment of $30,000 is due in February. There are no Note Payables at the end of 2020.

OPERATING EXPENSES

Monthly Cash expenses are paid when incurred

Salary and Wage Exp	$3,000
Sales Commissions Exp	7% of sales revenue
Rent Exp	$8,000
Gen & Admin Variable Exp	6% of sales revenue
Supplies Exp	$2,000
Gen & Admin Fixed Exp	$24,000
Gen & Admin Depreciation Exp	$24,000

(Cash expenses are paid when incurred)

CASH MANAGEMENT

The company must maintain a minimum cash balance of $15,000. Borrowing can make up shortfalls. For simplicity, assume that the bank will only lend (and accept repayments) in $1,000 increments. (Ignore interest on the loans, but minimize the amount borrowed and pay off any loans as soon as possible.)

DIVIDENDS

Dividends of $12,000 are paid in July.

BALANCE SHEET

Balance Sheet balances as of December 31, 2019:

Cash	$ 15,000
Accounts Receivable	$ 75,590
Supplies	$ 2,000
Merchandise Inventory	$ 16,000
Buildings and Equipment	$ 1,050,000
Accumulated Depreciation	$ 526,475
Accounts Payable	$ 26,304
Notes Payable	$ 80,000
Capital Stock	$ 200,000
Retained Earnings	$ 322,811

CHECK FIGURES

Cash Collections Budget

Total Cash Receipts for January: $ 104,200

Total Cash Receipts, Total 2020: $ 1,835,333

Bad Debt Exp for January: $ 3,150

Bad Debt Exp, Total 2020: $ 51,951

Purchase Budget

Cost of Purchases for Dec 2020: $ 52,479

Operating Expense Budget

Cash disbursements for Op Exp for Dec $ 55,281

Cash Budget

Total cash available, Summary $ 1,850,333

Total Cash Disbursements, Summary: $ 1,549,658

Ending Cash Balance for Dec: $ 300,676

Budgeted Income Statement

Gross Profit, Total: $ 1,134,388

Cost of Goods Sold Total $ 768,112

Net Income, Total: $ 103,113

Budgeted Balance Sheet

Total Assets Dec 2020: $ 645,411

How do you find values for Purchase Budget table and schedule of budgeted cash disbursements for merchandise purchases tables?

Jan 21 11.000 Nov 19 11.250 10.00 112.500 Budeed unt sales Saling page par unit Total Sales Dec 19 11.000 10.00 S 116.000 5 Jan 20 10,00D 10.00 100,000 Feb 20 11,400 10.00 $ 114.000 $ Me 20 12.000 10.00 20.000 Hudson, Inc. Sales Budget For Year Ending Dec 31, 2020 Jun 20 J 20 Aug 20 22,000 18.000 18,000 10 $ 10.00 10.00 220.000 $ 0.00 $ 100,000 Aur 20 15.000 0.00 $ 150.000 $ May 20 18.000 10.00 $ 100.000 $ Sep 20 17.000 11.25 $ 191,250 $ Oct 20 16,500 112 105,62% $ Ny 20 12.000 1126 350.00 Dec 20 Annual Total 12.500 194.GOD 1125 140.625 3 2018.500 $ $ $ $ $ $ $ $ Cash Sales Credt Sales 30% 33.750S S 55,688 8 Cash Sales Credt Sales Tote Sales 30,000 S 7.000 37.000 S 34.200 S 7900 42.180 S 7.875 35.000 $ 8.400 44.400 $ 46,800 5 10,920 57.7205 1 8. 120 42.9205 64,000 2.GOD 66 600 88 ANS 54,000 5 12.600 66.6005 67,375 5 11,900 69.2755 42,188 5 8,750 S 11.592 606,650 136,220 673 Current month AR Collections 1 month prior AR Collechons 2 months prior Ar Collections Uncollectible Hadiren Inc Cash Collections Budget For Year Ending Dec 31, 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Annual Total Current monchuh Sales Current month AR Collections 1 month prior NR Collections 2 months por A Collections Total cash collections Bad Dobt Espenze Desired ending inventory Tiedon nc Purchase Hudget For Year Ending Dec 31, 2020 2020 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20 Summary Hudsed unt RAR Add deyirding teritory Total unit needs Loss Beginning inventory Required Unit Purchases Cost per unit Cost of Purchases * Paid in Month of Purchase % Paid in Month at Purchase Hedron, Inc. Schedule of Budgated Cash Disbursements for Merchandise Purchases For Year Ending Dec 31, 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 S ep 20 Oct 20 Nov 20 Dec 20 Annual Total Cash purchases 1 month prior AP Payments Cash disbursements for merchandise purchase Variable Operating Expenses: Sales Commission Expe of Revenue Gan & Admin Variable Exp % of Revenue Fixed Operating expenses: Salary and Wage Exp Rent Exp Supplies Exp Gon & Admin lixed Exp Gen & Admin Depreciation ExpS $ 5 5 $ 3.000 8000 2,000 24,000 24 000 Hedron, Inc. Operating expense Budget For Year Ending Dec 31, 2020 Dec 20 Ann Jan 20 feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 53000 53000 53000 53000 53000 53000 53000 53000 53000 53,000 $ Nov 20 3,000 Salary and Waga Exn Sales Commission Exp Rent. Exp Gan & Admin Variable Exp Supplies Exp Gen & Admin Fixed Exp Gon & Admin Depreciation Exp Had Det Exp Tulal Operating Exp Less: Depreciation Exp inoncash) LARS Had Debt Exp inancash) Cash Disbursements for Operating Expenses 50.000 30 000 5 Note payment Ecuipment - January Note payment Equipment Fahniky Dividendy - Jul Minimum Monthly Cash Budget 12.000 15.000