INFORMATION FOR Napoleon, Inc. BUDGET PROJECT

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

2. As of 11/19, each lawn chair costs Imagine $4 per unit. Napoleon, Inc. sells each chair for $10 per unit.

3. The estimated sales (in units) are as follows:

Year	Month	Sales (in units)
2019	November	11,250
2019	December	11,600
2020	January	10,000
2020	February	11,400
2020	March	12,000
2020	April	15,600
2020	May	18,000
2020	June	22,000
2020	July	18,000

4. Per an existing contract, the cost of each chair is scheduled to increase by 5% on March 1, 2020. In addition, because of increasing costs of plastic webbing, the cost is anticipated to increase by an additional 5% on May 1, 2020. To offset these increases, the company plans to raise the sales price to $11.25 per unit beginning May 1, 2020. The sales forecast (i.e., estimated sales in units) takes this price increase into account.
5. Thirty percent of any months sales are for cash, and the remaining 70% are on credit. Thirty percent of the credit sales are collected in the month of sale, 50% are collected in the following month, and 16% are collected in the second month after the sale. The remaining receivables are deemed uncollectible. Bad debts are written off in the month the debt is deemed uncollectible (e.g. if the sale is made in January and is not collected by the end of March, it is written off in March.) No accrual for estimated bad debts is made in the month of sale.
6. The firms policy regarding inventory is to stock (i.e. have in ending inventory) 40% of the forecasted demand in units (i.e., estimated sales) for the next month. Imagine uses the first-in, first-out (FIFO) method in accounting for inventories.
7. Forty percent of the inventory purchases are paid for in the month of purchase and the remaining 60% are paid in the following month (i.e. all of the previous months Accounts Payable are paid off by the end of any month.)
8. Per a prior contract, a cash payment of $50,000 for equipment previously purchased is due in January. Another payment of $30,000 is due in February. Depreciation on the equipment previously purchased is included in the overhead cost detailed below (see item 9). Also, dividends of $12,000 are to be paid in March.
9. Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred):

Salaries and Wages	$3,000
Sales Commissions	7% of sales revenue
Rent	$8,000
Other Variable Cash Expenses	6% of sales revenue
Supplies Expense: See note	$2,000
Other: See note	$48,000

Note: Other general and administrative overhead is expected to be $48,000 per month. Of this amount, $24,000 represents depreciation and other non-cash expenses. The company maintains on hand one months worth of supplies.

10. 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 loan in your calculations, but minimize the amount borrowed and pay off any loans as soon as possible.
11. Cash on hand as of December 31, 2019 is expected to be $15,000. In addition, there will be no notes payable as of this date.
12. See below the other Balance Sheet accounts with their expected balances as of December 31, 2019:
    • Supplies................................................... $ 2,000
    • Property, Plant and Equipment.................. 1,050,000
    • Accumulated Depreciation........................... 526,475
    • Common Stock.............................................. 200,000
    • Retained Earnings......................................... 322,811

Please answer all 9 requirements, and show calculations and formulas in the answer. Thank you.

Sales Forecast and Budget

Cash Receipts budget

Purchase budget

Cash Purchases Disbursements budget

Operating Expense budget

Summary Cash budget

Budgeted Income Statement

Budgeted Balance Sheet

A written Summary Report

Sales Budget For the 6 months ending June 2020 Dec '19 Jan 20 Nov '19 Feb 20 Mar '20 Apr 20 May 20 Jun 20 6mos total Budged unit sales Selling price per unit Total Sales Cash Sales % Credit Sales % Cash Sales Credit Sales Total Sales Current month AR Collections 1 month prior A/R Collections 2 months prior A/R Collections Uncollectible Cash Collections For the 6 months ending June 2020 Feb 20 Mar 20 Jan 20 Apr 20 May 20 Jun 20 @mos total Current month cash Sales Current month AR Collections 1 month prior A/R Collections 2 months prior A/R Collections Total cash collections Bad Debt Expense Desired ending inventory % Purchase Budget For the 6 months ending June 2020 Nov '19 Dec '19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6mos total Budged unit sales Add desired ending inventory Total needs Less Beginning Inventory Required Purchases Cost per unit Purchases 1% Paid in Month of Purchase % Paid in Month after Purchase Schedule of Budgeted Cash Disbursements for Merchandise Purchases For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6mos total Cash purchases 1 month prior A/P Collections Cash disbursements for merchandise purch. Fixed Operating expenses: Salaries and Wages Rent Supplies Expense Other - Overhead Other - Depreciation Variable Operating Expenses: Sales Commissions, % of Revenue Other Variable Cash Expenses, % of Revenue Fixed Operating expenses: Salaries and Wages Rent Supplies Expense Other - Overhead Other - Depreciation Variable Operating Expenses: Sales Commissions, % of Revenue Other Variable Cash Expenses, % of Revenue Operating Expense Budget For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6 mos total Salaries and Wages Sales Commissions Rent Other Variable Cash Expenses Supplies Expense Other - Overhead Other - Depreciation Bad Debt Expense Total operating expenses Depreciation and noncash items Bad Debt Expense Cash disbursements for operating expenses Equipment payment - January Equipment payment - February Dividends - March Minimum Monthly Cash Budget Cash Budget For the 6 months ending June 2020 Feb 20 Mar 20 Jan 20 Apr 20 May 20 Jun 20 6mos total Cash balance, beginning Add collections from customers Total cash available Less disbursements: Cash disbursements for merchandise purch. Cash disbursements for operating expenses Equipment purchases Dividends Total cash disbursements Excess of receipts over disbursements Financing: Borrowing-note Repayments-note Total financing Cash balance, ending Budgeted Income Statement For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr '20 May 20 Jun 20 Total Sales, net Cost of goods sold: Gross margin Total operating expenses Net Income Budgeted Balance Sheet 6/30/20 Assets Current Assets: Cash Accounts receivable Supplies Merchandise Inventory Plant and Equipment: Buildings and Equipment Accumulated Depreciation Total assets Liabilities and Equity Accounts payable Capital stock Retained earings Total liabilities and equity FIFO Calculation Beg Inventory Beg Inventory - Units Purchases - Units COGS Units Purchases COGS Ending Inventory Ending Inventory- Units Jan Feb Mar Apr May Jun Sales Budget For the 6 months ending June 2020 Dec '19 Jan 20 Nov '19 Feb 20 Mar '20 Apr 20 May 20 Jun 20 6mos total Budged unit sales Selling price per unit Total Sales Cash Sales % Credit Sales % Cash Sales Credit Sales Total Sales Current month AR Collections 1 month prior A/R Collections 2 months prior A/R Collections Uncollectible Cash Collections For the 6 months ending June 2020 Feb 20 Mar 20 Jan 20 Apr 20 May 20 Jun 20 @mos total Current month cash Sales Current month AR Collections 1 month prior A/R Collections 2 months prior A/R Collections Total cash collections Bad Debt Expense Desired ending inventory % Purchase Budget For the 6 months ending June 2020 Nov '19 Dec '19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6mos total Budged unit sales Add desired ending inventory Total needs Less Beginning Inventory Required Purchases Cost per unit Purchases 1% Paid in Month of Purchase % Paid in Month after Purchase Schedule of Budgeted Cash Disbursements for Merchandise Purchases For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6mos total Cash purchases 1 month prior A/P Collections Cash disbursements for merchandise purch. Fixed Operating expenses: Salaries and Wages Rent Supplies Expense Other - Overhead Other - Depreciation Variable Operating Expenses: Sales Commissions, % of Revenue Other Variable Cash Expenses, % of Revenue Fixed Operating expenses: Salaries and Wages Rent Supplies Expense Other - Overhead Other - Depreciation Variable Operating Expenses: Sales Commissions, % of Revenue Other Variable Cash Expenses, % of Revenue Operating Expense Budget For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 6 mos total Salaries and Wages Sales Commissions Rent Other Variable Cash Expenses Supplies Expense Other - Overhead Other - Depreciation Bad Debt Expense Total operating expenses Depreciation and noncash items Bad Debt Expense Cash disbursements for operating expenses Equipment payment - January Equipment payment - February Dividends - March Minimum Monthly Cash Budget Cash Budget For the 6 months ending June 2020 Feb 20 Mar 20 Jan 20 Apr 20 May 20 Jun 20 6mos total Cash balance, beginning Add collections from customers Total cash available Less disbursements: Cash disbursements for merchandise purch. Cash disbursements for operating expenses Equipment purchases Dividends Total cash disbursements Excess of receipts over disbursements Financing: Borrowing-note Repayments-note Total financing Cash balance, ending Budgeted Income Statement For the 6 months ending June 2020 Jan 20 Feb 20 Mar 20 Apr '20 May 20 Jun 20 Total Sales, net Cost of goods sold: Gross margin Total operating expenses Net Income Budgeted Balance Sheet 6/30/20 Assets Current Assets: Cash Accounts receivable Supplies Merchandise Inventory Plant and Equipment: Buildings and Equipment Accumulated Depreciation Total assets Liabilities and Equity Accounts payable Capital stock Retained earings Total liabilities and equity FIFO Calculation Beg Inventory Beg Inventory - Units Purchases - Units COGS Units Purchases COGS Ending Inventory Ending Inventory- Units Jan Feb Mar Apr May Jun