Question
MASTER BUDGET FACTS AND FIGURES: You have just been hired as a management trainee by Benjamin's Fashions, a nationwide distributor of a designer's silk ties.
MASTER BUDGET FACTS AND FIGURES: You have just been hired as a management trainee by Benjamin's Fashions, a nationwide distributor of a designer's silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the management team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next 12 months starting January 1, 2022. You are anxious to make a favorable impression on the president and have assembled the information below. The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8.00 each (75% of total sales, all on account) and $10.00 each to the individual customers in the mall stores (25% of total sales, all in cash). Recent and forecasted sales in units are as follows:
Months Units Months Units August 2021 Actual 20,000 January 2022 Budgeted 60,000 September 2021 Actual 24,000 February 2022 Budgeted 40.000 October 2021 Actual 28,000 March 2022 Budgeted 36,000 November 2021 Budgeted 35,000 April 2022 Budgeted 32,000 December 2021 Budgeted 45,000ASSETS Cash ............................................................... $ 14,000 Accounts Receivable ($73,750 November sales; $337,500 'om December Sales ...... 416,250 Inventory (54,000 units} ......................................................... 270,000 Fixed Assets net of Depreciation .......................................... 172,700 Total Assets ........................................................................ $ 372,950 ACCT_3000 Group Project Page 2 LIABILITIES AND SHAREHOLDERS EQUITY Accounts Payable .................................................................. $ 163,750 Dividends Payable .................................................................. 12,000 Capital Stock ........................................................................ 400,000 Retained Earnings .................................................................. 222,2!!! Total Liabilities and Shareholders' Equity ...................................... $ 372,950 The company has an agreement with the Prime bank that allows the company to borrow in increments of $ 1,000 at the beginning of each month, up to a total line of credit balance of $70,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of every month, the company would pay the bank all of the accumulated interest on the loan and pay back as much of the loan as possible (in increments of $1,000], while still retaining at least $10,000 in cash balance. Interest on the loan is paid only at the time of repayment of the loan and on the outstanding amountStep by Step Solution
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