MOSTLY $4,5,$ & $6.$

You need to prepare a comprehensive $6-$month budget, including supporting schedules and a report for the period January $1,2020$to June $30,2020$for Imagine, Inc $($a fictional company$).$ This project must include:

$1.$Sales Forecast and Budget

$2.$Cash Receipts budget

$3.$Purchase budget

$4.$ Operating Expense budget

$5.$ FIFO Calculation

$6.$ Suggest at least $3$ways you can improve the business forecast for the next $6$months to a year.

Notes and Hints

You may only input a $$hard number$$into a pink cell. All yellow cells must be formula based $($no numbers included $$use appropriate cell referencing$).$

I recommend constructing the formulas for one month and then copying the formulas over to the remaining months.

Rounding is encouraged and you may ignore interest and taxes.

Check figures are also located on the budget project module.

INFORMATION FOR IMAGINE, INC. BUDGET PROJECT

Imagine, 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.

As of $\frac{11}{19},$ each lawn chair costs Imagine $$4$ per unit. Imagine sells each

chair for $$10$ per unit.

The estimated sales $($in units$)$ are as follows:

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 $1,$

To offset these increases, the company plans to raise the sales price to

$$11\mathrm{.}25$ per unit beginning May $1,2020.$ The sales forecast $($i$.$e$.,$ estimated

sales in units$)$ takes this price increase into account.

Thirty percent of any month's 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.

The firm's 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.

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 month's Accounts Payable are paid off by the end of any month.$)$

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

overhe ad cost detailed below $($see item $9).$ Also, dividends of $$12,000$ are to

be paid in March.

Monthly operating expenses consist of the following $($if these are cash

expenses, they are paid when incurred$)$:

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 month's vorth of supplies.

The company must maintain a minimum cash balance of $$15,000.$ Borowing can make up

shortfals. For simplicity, assume that the bank will orly lend $($and accept repayments$)$ in

$$1,000$ increments. Ignove interest on the loan in your cal culations, but minimize the amount

borrowed and pay off any loans as soon as possible.

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.

See below the other $B$ alance Sheet accounts with their expected balances as

of December $31,2019$:

Supplies $$2,000$ manth. Imagine uses the first$-$in$,$ first$-$out $($FIFO$)$ mothod in accourting for

invantarios.

Forty porcent of the inventory purchases are paid far in the month of

purchase and the memairing $60\%$ ane paid in the following momh $(1.$e$.$ all of the

provious month's Accourts Payable are paid off by the ond af any month.$)$

Por a priorcontract, a cash payment of $$50,000$ for e