inter Calibri 11 ANA BI U T & A - Font xv fx C Wrap lext Merge & Center $-% Numi Alignment alley Manufacturing is worth 35 points & P & B Manufacturing is worth 30 points for a total of 65 points Valley Manufacturing Inc Balance Sheet June 30, 2021 Assets Inventory Cash Accounts receivable Plant and equipment, net of depreciation $ SSS $ 140,000 $ 175,000 45,200 $ 554,800 $ 915,000 Total Assets Liabilities and Stockholders' Equity $ 115,000 Accounts payable $ 586,000 Common stock $ 214,000 Retained earnings $ 915,000 Total Liabilities and Stockholders' Equity ------ Valley's managers have made the following additional assumptions and estimates: 1 Estimated sales for July and August are $360,000 and $315,000 respectively < > 2 Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July 3 Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July 4 Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred 5 The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during Valley Mfg Parts 1 thru 8 Valley Mfg Requirements Valley Manufacturing Data Select destination and press ENTER or choose Paste 34F Clear Q Search P & B Manufacturing Data PRE Total Assets C $ 915,000 Liabilities and Stockholders' Equity Accounts payable $ 115,000 Common stock S 586,000 Retained earnings $ 214,000 Total Liabilities and Stockholders' Equity $ 915,000 Valley's managers have made the following additional assumptions and estimates: 1 Estimated sales for July and August are $360,000 and $315,000 respectively 2 Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of the sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July 3 Each month's ending inventory must equal 20% of the cost of the next month's sales. The Cost of Goods Sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July 4 Monthly selling and administrative expenses are always $75,000. Each month $10,000 of this total amount is depreciation expense and the remaining $65,000 relates to expenses that are paid in the month they are incurred 5 The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay any dividends, issue any common stock or repurchase any of its own common stock during July 5 Valley Manufacturing Data Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Manufacturing D. Select destination and press ENTER or choose Paste 10 34F Clear Q Search C D Required: 1. Calculate the expected cash collections for July 2. Calculate the expected cash disbursements for merchandise purchases for July 3. Prepare a cash budget for July 4. Prepare a budgeted Income Statement for the month ended July 31. Use an absorption format. 5. Prepare a budgeted Balance Sheet as of July 31 6. Calculate the estimated accounts receivable turnover and inventory turnover for the month of July 7. Calculate the estimated operating cycle for the month of July. Use 30 days in the numerator to calculate the average collection period 8. Using the indirect method, calculate the estimated net cash provided by operating activities for July Valley Manufacturing Data Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Man t destination and press ENTER or choose Paste 34F Clear Q Search nter E Calibri 11 H A BI U - - | - A Font XV fx B C Wrap lext Merge & Center $ -% Alignment Numb D Requirements for Valley Manufacturing Any answer box highlighted in yellow will turn green with a correct answer Final Answer Box Ready 1 Calculate the expected total cash collections for July 2 Calculate the expected cash disbursements for merchandise purchases for July 3 Cash Budget for July Valley Manufacturing Inc Cash Budget For the Month of July Beginning cash balance Add: collections from customers Total cash available Less: cash disbursements: Purchase of inventory Selling and administrative expenses Total cash disbursements Excess of cash available over disbursements Financing: Borrowing $ $ $ 333,400 Repayments Valley Manufacturing Data Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Manufacturing Data P& Accessibility: Investigate 34F Q Search Clear inter XV fx Font B Beginning cash balance Add: collections from customers Total cash available Less: cash disbursements: C Purchase of inventory Selling and administrative expenses Total cash disbursements Excess of cash available over disbursements Financing: Borrowing Repayments Interest Total financing Ending cash balance 4 Budgeted Income Statement for July 31 (absorption format) Valley Manufacturing Inc Budgeted Income Statement For the Month of July Sales Cost of Goods Sold Gross Margin Selling and administrative expenses Net Operating Income Interest expense Net Income (Net Loss) 5 Balance Statement Valley Manufacturing Inc Budgeted Income Statement For the Month of July Alignment $ $ $ $ D SSSSS $ 360,000 216,000 144,000 $ 75,000 69,000 69,000 Valley Manufacturing Data Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Manufacturing Accessibility: Investigate 34 F Clear Q Search ARE at Painter Calibri BIU F XVfx 11 AA E Wrap Text A Merge & Center $ Font Alignment B C Net Income (Net Loss) 5 Balance Statement Valley Manufacturing Inc Budgeted Income Statement For the Month of July Cash Accounts receivable Inventory Assets Plant and equipment, net of depreciation Total Assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total Liabilities and Stockholders' Equity $ $ $ $ D $ 69,000 6a Calculate estimated Accounts receivable turnover for July (round to 2 decimal places) 6b Calculate estimated Inventory turnover for July (round to 2 decimal places) 7 Calculate estimated Operating Cycle for July- use 30 days in numerator to calculate the average collection period and average sales period (round to 2 decimal places) 8 Net cash provided by operating activities for July (indirect method) < eady < 34F Valley Manufacturing Data Accessibility: Investigate Clear Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Manufacturing Search Font fx C Plant and equipment, net of depreciation Total Assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total Liabilities and Stockholders' Equity Alignment D E $ $ $ $ 6a Calculate estimated Accounts receivable turnover for July (round to 2 decimal places) 6b Calculate estimated Inventory turnover for July (round to 2 decimal places) 7 Calculate estimated Operating Cycle for July-use 30 days in numerator to calculate the average collection period and average sales period (round to 2 decimal places) 8 Net cash provided by operating activities for July (indirect method) Deductions to Net Income must be entered as a negative Net income Adjustments to convert net income to a cash basis: Depreciation Accounts receivable Inventory Accounts payable Sub total of adjustments Net cash provided by operating activities $ N Valley Manufacturing Data Valley Mfg Requirements Valley Mfg Parts 1 thru 8 P & B Manufacturing Data Accessibility: Investigate 34F Q Search Clear RE