Observer Company

Budgeted Income Statement

For the First Quarter $20$x$2$

Sales Revenue

Less: Cost of Goods Sold

Gross Margin

Less: Selling & Administrative Expenses:

Sales salaries

Sales commissions

Advertising & promotion

Administrative salaries

Depreciation

Interest on bonds

Interest on short$-$term loan

Property taxes

Total S & A Expenses $$-$

Net Income $$-$

Observer Company

Budgeted Balance Sheet

$3/31/20$x$2$

Assets:

Cash

Accounts Receivable

Inventory

Building & Equipment $($net of accumulated depreciation$)$

Total Assets $-$

Liabilities and Stockholder's Equity:

Accounts payable

Bond interest payable

Property taxes payable

Bonds payable $($due in $20$x$6)$

Common Stock

Retained Earnings

Total Liabilities & Stockhoder's Equity $$-$

Fill out the above using the below information:

Sales Budget

$20$x$120$x$2$

December January February March Quarter $1$

Total Sales $$400,000$ $$440,000$ $$484,000$ $$532,400$ $$1,456,400$

Credit Sales $300,000330,000363,000399,3001,092,300$

Cash Sales $$100,000$ $$110,000$ $$121,000$ $$133,100$ $$364,100$

Cash Receipts Budget

$20$x$2$

January February March Quarter $1$

Cash Sales $$110,000$ $$121,000$ $$133,100$ $$364,100$

Cash collections$-$current

month's credit sales $33,00036,30039,930109,230$

Cash collections$-$previous

month's credit sales $270,000297,000326,700893,700$

Total Cash Receipts $$413,000$ $$454,300$ $$499,730$ $$1,367,030$

Inventory Purchases Budget

$20$x$120$x$2$

December January February March Quarter $1$

Budgeted CGS $$280,000$ $$308,000$ $$338,800$ $$372,680$ $$1,019,480$

Add:Desired Ending Inv. $154,000169,400186,340186,340$

Total goods needed $434,000477,400$

Less: Expected Begin Inv. $140,000154,000$

Purchases $$294,000$ $$323,400$ $$355,740$ $$372,680$ $$1,051,820$

Cash Disbursements $($CD$)$ Budget

$20$x$2$

January February March Quarter $1$

Inventory Purchases:

CDs for current month purchases $$129,360$ $$142,296$ $$149,072$ $$420,728$

CDs for previous month purchases $$176,400$ $$194,040$ $$213,444583,884$

Total CDs for inventory purchases $$305,760$ $$336,336$ $$362,516$ $$1,004,612$

Other Expenses:

Sales salaries $$21,000$ $$21,000$ $$21,000$ $$63,000$

Advertising & promotion $16,00016,00016,00048,000$

Administrative salaries $21,00021,00021,00063,000$

Interest on bonds $15,000--15,000$

Property taxes $-5,400-5,400$

Sales commissions $4,4004,8405,32414,564$

Total CDs for Other Expenses $$77,400$ $$68,240$ $$63,324$ $$208,964$

Total Cash Disbursements $$383,160$ $$404,576$ $$425,840$ $$1,213,576$

Summary Cash Budget

$20$x$2$

January February March Quarter $1$

Cash Receipts $$413,000$ $$454,300$ $$499,730$ $$1,367,030$

Cash Disbursements $383,160$ $$404,576$ $$425,840$ $$1,213,576$

Change in cash due to operations $$29,840$ $$49,724$ $$73,890$ $$153,454$

Proceeds from sale of

marketable securities $15,00015,000$

Proceeds from bank loan $100,000100,000$

Purchase of equipment $(125,000)(125,000)$

Repayment of bank loan $$(100,000)$ $$(100,000)$

Interest on bank loan $(2,500\mathrm{.}00)(2,500\mathrm{.}00)$

Payment of dividends $(50,000\mathrm{.}00)(50,000\mathrm{.}00)$

Change in cash balance during Quarter $1$

Cash balance, January $1,20$x$235,000$

Cash balance, March $31,20$x$2$ $$25,954$

Analysis of short$-$term financing needs:

Projected cash balance at December $31,20$x$1$ $$35,000$

Less: Required minimum cash balance $25,000$

Cash Available for equipment purchase $10,000$

Proceeds from sale of marketable securities $15,000$

Cash available $25,000$

Less: Cost of equipment $125,000$

Required short$-$term borrowing $$(100,000)$