Nordic Company Balance Sheet March 31, 2020 Assets Cash Accounts Receivable Inventory Buildings & equipment (net) $15,750 $84,000 $22,050 $374,675 $496,475 Total Assets $32,025 Liabilities & Owners' Equity Liabilities Accounts Payable Owners' Equity Capital Stock Retained earnings $332,500 $131,950 Total liab. & Owners' equity $496,475 Question 1 (5 points) Clue #1- Sales Budget The marketing department has estimated sales in units as follows: March (actual) 21,000 April 24,500 May 29,750 June 31,500 July 17,500 The selling price of each unit is $5. What are the total sales budgeted for the second quarter? Question 2 (5 points) Clue #2- Cash Collections Schedule Sales are 20% for cash and 80% on credit. All payments on credit sales are collected in the month following the sale. The accounts receivable at March 31 are a result of March credit sales. What is the expected amount of cash to be collected in June? (Hint: You may want to calculate April and May also to help you later in the race.) clue #4 - Merchandise Purchases Budget The company's gross margin percentage is 40% of sales (i.e. cost of goods sold is 60% of sales). Each month's inventory should equal 30% of the following month's cost of goods sold. Beginning inventory has been given to you. What are total required purchases for June? A/ Hide hint for Question 5 = Hint #1: Ending inventory for Month #1 is equal to the beginning inventory for Month #2. Hint #2: Total inventory needs = budgeted cost of goods sold plus desired ending inventory. Hint #3: Check figure: Required purchases for May = $90,825. = Clue #5- Cash Disbursements for Purchases Half of a month's inventory purchases are paid for in the month of purchase and half in the following month. Accounts payable for March 31 have been given to you. What are total expected cash disbursements for purchase of inventory for the month of June? ? A Hide hint for Question 6 Hint #1: Carefully consider the timing of the cash payments and which amounts get paid in each month of the quarter. Hint #2: All accounts payable are paid for in the month following their occurrence. This is a 30 day payment policy. Hint #3: Check figure: May Cash Disbursements = $84,526. = Clue #6- Cash Disbursements for Selling and Administrative Expenses Monthly selling and administrative expenses are budgeted as follows: salaries and wages, $13,125 per month; shipping, 6% of sales; advertising, $10,500 per month; other expenses, 4% of sales; Depreciation, including depreciation on new assets acquired during the quarter, will be $10,500 for the quarter. What are total expected cash disbursements for selling and administrative expenses for June? Clue #7- Cash Budget Equipment purchases during the quarter will be: April $20,125 . May $5,250 Dividends of $6,125 will be paid in June. Management wants to maintain a minimum cash balance of $10,000. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $30,000. . Interest is 1% per month Nordic can repay the loan at the end of the quarter if it is able to do so. The beginning cash balance has been given to you. What amount will Nordic Company plan to borrow (repay) during June? Note: Repayments must be listed in parenthesis. Clue #8- Balance Sheet You should have all the information in your various schedules. O How much are the current assets at June 30th? 163,975 View hint for Question 11 Next Page Page