JKL Corp., a manufacturer of microwave ovens, has developed the following sales and sales forecast figures: December (actual) January February March April 10,000 units 9,000 6,000 12,000 15,000 The selling price is $150 per unit. Based on prior experience, it is expected that 20% of sales will be collected in the month of sale with the remaining 80% collected in the month following. Production each month is 100% of that month's forecast sales. Unit production costs are forecast at $80 for raw materials (an increase from the $75 paid last year), $10 for direct labor, and $5 for variable overhead. Raw materials sufficient for that month's production are purchased each month and paid for the following month. Direct labor and overhead costs are paid for in the month incurred. Selling and administrative expense is budgeted at 10% of sales and is paid in the month incurred. Depreciation expense is $20,000 each month. Cash on the 12/31 Balance Sheet is $50,000 which is the minimum cash balance used for planning. JKL holds no marketable securities at 12/31. XYZ is planning to buy $250,000 of new equipment to be delivered in January. JKL will pay for the equipment in February. Tax payments of $25,000 will be made in January and April. Whenever it is necessary to take a loan to meet cash requirements, the firm repays that loan as quickly as possible from subsequent operating cash flows. a) Calculate cash collections for January. b) Calculate total cash disbursements for February c) For February, determine the amount of excess cash or borrowing that XYZ will have. d) What will Accounts Payable be on a 3/31 pro-forma balance sheet? e) What will Accounts Receivable be on a 3/31 pro-forma balance sheet? 4. The balance sheet and income statement for Barboursville Bottle Company (BBC) as of December 31, 2xx1, are shown below. 30,000 10,000 5,000 45,000 20,000 500 89,500 155,000 BBC Corporation ($) Cash 5,000 Accounts Payable Accounts Receivable 25,000 Accruals Inventory 25,000 Notes Payable Current Assets 55,000 Current Liabilities Long-Term Debt Net Fixed Assets 100,000 Common Stock Retained Earnings Total Assets 155,000 Total Liabilities & Owners' BBC Income Statement ($) Sales (all credit) $500,000 - Cost of Goods Sold 300,000 Gross Profit 200,000 - Selling, General & Administrative Expense 2,500 - Depreciation Expense 25,000 Earnings Before Interest & Taxes 172,500 - Interest Earnings Before Taxes 170,000 - Taxes 68,000 Net Income $102,00 X L ex re 2,500 HA Calculate the cash conversion cycle for BBC and determine the amount of funding that is necessary to support operations. Use a 360 day year in all calculations. 5. Cousin Clara has been doing some additional research on the funding for the "You Go Girl Foundation". Due to the political climate she feels it is likely that there will be budget cuts that will affect future grant funding. She has decided to begin operations six years from today (it is still January 1), and she still has an operating budget of $50,000 per year. Due to the budget cuts, she will have to fund operations for six years before some grants become available. And after the first six years, she will have to provide $20,000 per year for two more years until total grant funding is possible. All operating funds must be available on the first day of each year. Clara will still work full time at her job with the credit company to raise the funds necessary for the first twelve years of operations. After the project begins, she will only work enough to pay for her own living expenses, so she must save enough during the next six years to cover the eight years of operating expenses. Due to the need for additional capital, she will make a deposit today of $50,000 and equal-sized deposits at the end of each of the next six years. The account at the First Philanthropy Bank will pay 4% interest annually. All monies for the foundation will be deposited in this account. How much must Clara deposit at the end of each of the next six years so that there will be sufficient funds available to finance the foundation's operating budget for following eight years? JKL Corp., a manufacturer of microwave ovens, has developed the following sales and sales forecast figures: December (actual) January February March April 10,000 units 9,000 6,000 12,000 15,000 The selling price is $150 per unit. Based on prior experience, it is expected that 20% of sales will be collected in the month of sale with the remaining 80% collected in the month following. Production each month is 100% of that month's forecast sales. Unit production costs are forecast at $80 for raw materials (an increase from the $75 paid last year), $10 for direct labor, and $5 for variable overhead. Raw materials sufficient for that month's production are purchased each month and paid for the following month. Direct labor and overhead costs are paid for in the month incurred. Selling and administrative expense is budgeted at 10% of sales and is paid in the month incurred. Depreciation expense is $20,000 each month. Cash on the 12/31 Balance Sheet is $50,000 which is the minimum cash balance used for planning. JKL holds no marketable securities at 12/31. XYZ is planning to buy $250,000 of new equipment to be delivered in January. JKL will pay for the equipment in February. Tax payments of $25,000 will be made in January and April. Whenever it is necessary to take a loan to meet cash requirements, the firm repays that loan as quickly as possible from subsequent operating cash flows. a) Calculate cash collections for January. b) Calculate total cash disbursements for February c) For February, determine the amount of excess cash or borrowing that XYZ will have. d) What will Accounts Payable be on a 3/31 pro-forma balance sheet? e) What will Accounts Receivable be on a 3/31 pro-forma balance sheet? 4. The balance sheet and income statement for Barboursville Bottle Company (BBC) as of December 31, 2xx1, are shown below. 30,000 10,000 5,000 45,000 20,000 500 89,500 155,000 BBC Corporation ($) Cash 5,000 Accounts Payable Accounts Receivable 25,000 Accruals Inventory 25,000 Notes Payable Current Assets 55,000 Current Liabilities Long-Term Debt Net Fixed Assets 100,000 Common Stock Retained Earnings Total Assets 155,000 Total Liabilities & Owners' BBC Income Statement ($) Sales (all credit) $500,000 - Cost of Goods Sold 300,000 Gross Profit 200,000 - Selling, General & Administrative Expense 2,500 - Depreciation Expense 25,000 Earnings Before Interest & Taxes 172,500 - Interest Earnings Before Taxes 170,000 - Taxes 68,000 Net Income $102,00 X L ex re 2,500 HA Calculate the cash conversion cycle for BBC and determine the amount of funding that is necessary to support operations. Use a 360 day year in all calculations. 5. Cousin Clara has been doing some additional research on the funding for the "You Go Girl Foundation". Due to the political climate she feels it is likely that there will be budget cuts that will affect future grant funding. She has decided to begin operations six years from today (it is still January 1), and she still has an operating budget of $50,000 per year. Due to the budget cuts, she will have to fund operations for six years before some grants become available. And after the first six years, she will have to provide $20,000 per year for two more years until total grant funding is possible. All operating funds must be available on the first day of each year. Clara will still work full time at her job with the credit company to raise the funds necessary for the first twelve years of operations. After the project begins, she will only work enough to pay for her own living expenses, so she must save enough during the next six years to cover the eight years of operating expenses. Due to the need for additional capital, she will make a deposit today of $50,000 and equal-sized deposits at the end of each of the next six years. The account at the First Philanthropy Bank will pay 4% interest annually. All monies for the foundation will be deposited in this account. How much must Clara deposit at the end of each of the next six years so that there will be sufficient funds available to finance the foundation's operating budget for following eight years