Janus Products. Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past,Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials. which occur during August. The following information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for July to October are as follows: 25 po'nzs Jul}.r August September October Sales $43,888 $733,888 $53,oraa $43,939 Cost 01' goods sold 25,288 43,288 31,239 23,239 Gross margin 1?,888 29,888 21,888 19,388 Selling and administrative expenses: Selling expense 8,188 12,388 8,888 LEBB Administrative expense\" 5,888 ?,588 5,488 6,288 Total selling and administrative expenses 13,988 19,888 15,288 13,388 Net operating income 5 31-993 5134-393 $ 515433 $ 54933 "lncludes $2,150 depreciation each month. b. Sales are 20% for cash and 80% on credit. c. Credit sales are collected over a three-month period, with 10% collected in the month of sale, T086 in the month following sale, and 20% in the second month following sale. May sales totalled $33000. and June sales totalled $39,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid fo=r in the month of purchase. The remaining 50% are paid in the following month. Accounts payable for inventory purchases at June 30 total $13,200. e. The company maintains its ending inventory levels at 7596 of the cost of the merchandise to be sold in the following month. The merchandise inventory at June 30 is $19,500. f. Land costing $4,650 will be purchased in July. o. Dividends of$1.150 will be declared and paid in September. merchandise inventory at June 30 IS $19,500. f. Land costing $4,650 will be purchased in July. g. Dividends of $1,150 will be declared and paid in September. h. The cash balance on June 30 is $8,300; the company must maintain a cash balance of at least this amount at the end of each month. i. The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that 25 interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. points Required: 1. Prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. JANUS PRODUCTS, INC. Schedule of Expected Cash Collections July August September Quarter Cash sales 8,600 5 14.600 $ 10,600 33,800 Credit sales: May 5,280 5,280 June 21,840 6,240 28,080 July 3,440 24,080 6,880 34,400 August 5,840 40,880 46,720 September 4,240 4,240 Total cash collections $ 39,160 $ 50,760 $ 62,600 $ 152,52025 2. Prepare the following for merchandise inventory: points a. A merchandise purchases budget for July, August, and September. JANUS PRODUCTS, INC. Merchandise Purchases Budget July August September Budgeted cost of goods sold $ 25,200 43,200 $ 31,200 Add: Desired ending inventory Total needs Deduct: Beginning inventory Required inventory purchasesb. A schedule of expected cash disbursements for merchandise purchases for July, August, and September and for the quarter in total. 25 JANUS PRODUCTS, INC. points Schedule of Expected Cash Disbursements July August September Quarter Accounts payable, June 30 July purchases August purchases September purchases Total cash disbursements $ 0 $ 0 $ 0 $ 03. Prepare a cash budget for July, August, and September and for the quarter in total. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be Indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.) JANUS PRODUCTS, INC. 25 Cash Budget points For the Quarter Ended September 30 July August September Quarter Total cash available 0 0 0 Deduct: Disbursements: Total disbursements 0 0 0 Excess (deficiency) of cash available over disbursements Financing: Total financing 0 02 Minden Company Is a wholesale distributor of premium European chocolates. The company's balance sheet on April 30 is as follows: MINDEN COMPANY Balance Sheet April 30 Assets 25 Cash $ 14, 690 points Accounts receivable, customers 61, 909 Inventory 34, 290 Buildings and equipment, net of depreciation 235, 909 Total assets $344, 808 Liabilities and Shareholders' Equity Accounts payable, suppliers $ 71, 490 Note payable 17, 308 Capital shares, no par 208, 906 Retained earnings 48 , 190 Total liabilities and shareholders' equity $344, 808 The company is In the process of preparing budget data for May. A number of budget items have already been prepared, as follows: a. Sales are budgeted at $480,000 for May. Of these sales, $144,000 will be for cash; the remainder will be credit sales. One-half of a month's credit sales are collected In the month the sales are made, and the remainder are collected In the following month. All of the April 30 receivables will be collected In May. b. Purchases of Inventory are expected to total $288,000 during May. These purchases will all be on account. 40% of all purchases are paid for In the month of purchase; the remainder are paid In the following month. All of the April 30 accounts payable to suppliers will be paid during May c. The May 31 Inventory balance is budgeted at $96,000. d. Operating expenses for May are budgeted at $172,800, exclusive of depreciation. These expenses will be paid in cash. Depreciation is budgeted at $4,800 for the month. e. The note payable on the April 30 balance sheet will be paid during May, with $80 In Interest. (All of the Interest relates to May.) f. New refrigerating equipment costing $9,300 will be purchased for cash during May. g. During May, the company will borrow $48,000 from its bank by giving a new note payable to the bank for that amount. The new note will be due In one year.Required: 2 1. Prepare a cash budget for May. (Any "Repayments" and "Interest" should be indicated by a minus sign.) MINDEN COMPANY Cash Budget 25 For the Month Ended May 31 points Cash balance, beginning Add: Receipts from customers Total cash available 0 Deduct: Disbursements: Accounts payable, suppliers Operating expenses Note payable Interest Total cash disbursements 0 Excess of receipts over disbursements Financing: Total financing 02 2. Prepare a budgeted income statement for May. 25 points MINDEN COMPANY Budgeted Income Statement For the Month Ended May 31 Cost of goods sold: Goods available for sale 0 Cost of goods sold3. Prepare a budgeted balance sheet as of May 31. 2 MINDEN COMPANY Budgeted Balance Sheet as of May 31 25 Assets points Total assets 0 Liabilities and Shareholders' Equity Total liabilities and shareholders' equity 0