PLEASE DO NOT FORGET TO ATTACH A SCREENSHOT OF THE LINKED EXCEL FORMULAS! IMPORTANT!

1. Sales budget: March (actual) April May June July Total Sales $60.000 $70,000 $85.000 $90,000 $50,000 Cash (20%) $12.000 $14,000 $17.000 $18,000 $10,000 Credit (80%) 48.000 56,000 68,000 72.000 40,000 All credit sales are collected in the month following the sale. Schedule of Expected Cash Collections April May June Total Cash sales $14,000 $ 17,000 $18,000 $ 49,000 Credit sales 48,000 56.000 68.000 _172.000 Total collections $62,000 $ 73,000 $86,000 S221,000 2 a. Merchandise purchases budget: Page 358 April May June Total Budgeted cost of goods sold $42.000 $51,000 $54,000 $147,000 Add desired ending inventory 15,300 16,200 9.000 9,000 Total needs 57,300 67,200 63.000 156,000 Less beginning inventory 12.600 15.300 16,200 12.600 Required purchases $44,700 $51,900 $46,800 $143,400 * At April 30: $51,000 X 30% = $15,300 At June 30: $50,000 July sales x 60% x 30% = $9,000 b. Schedule of cash disbursements for purchases: April May June Total For March purchases $18,300 $ 18,300 For April purchases 22,350 $22,350 44,700 For May purchases 25,950 $25,950 51,900 For June purchases 23.400 __23.400 Total cash disbursements $40,650 $48,300 $49,350 $138,300 3. Schedule of cash disbursements for selling and administrative expenses: April May June Total Salaries and wages $ 7,500 $ 7,500 $ 7,500 $22.500 Shipping (6% of sales) 4,200 5,100 5,400 14,700 Advertising 6.000 6,000 6,000 18,000 Other expenses (4% of sales) 2.800 3,400 3.600 9.800 Total cash disbursements for selling and administrative expenses $20,500 $22,000 $22,500 $65.000 4 Q 4. Cash budget: April May June Total $ 9,000 62,000 71,000 $ 8,000 $ 8,000 $ 9,000 73,000 86,000 221,000 81,000 94,000 230,000 Cash balance, beginning. Add cash collections. Total cash available. Less disbursements: For inventory purchases For selling and administrative expenses. For equipment purchases For dividends Total disbursements Excess (deficiency) of cash Financing: Borrowings* Repayments. Interest** Total financing Cash balance, ending 40,650 20,500 11,500 0 72,650 (1,650) 48,300 22,000 3,000 0 49,350 22,500 0 3,500 75,350 18,650 138,300 65,000 14,500 3,500 221,300 8,700 73,300 7,700 9,747 0 (97) 401 0 (101) 0 (10,148) (101) (10,249) $ 8,401 10.148 (10,148) (299) (299) $ 8,401 300 9,650 $ 8,000 $ 8,000 *April: ($1,650) + X -0.01X = $8,000; X = $9,747 (rounded) May: $7,700 + X -0.01X - $97 (interest on April loan) = $8,000; X = $401 (rounded) **April: $9,747 x 1% = $97; May and June: ($9,747 + $401) > 1% = $101 5. Income statement: $245,000 ROCKET COMPANY Income Statement For the Quarter Ended June 30 Sales Cost of goods sold (CGS): Beginning inventory (given). $ 12,600 Add purchases (Part 2) 143,400 Goods available for sale 156,000 Ending inventory (Part 2) 9,000 Gross margin Selling and administrative expenses: Salaries and wages (Part 3) 22,500 Shipping (Part 3) 14,700 18,000 Advertising (Part 3) 6,000 Depreciation 9,800 Other expenses (Part 3) Operating income Less interest expense (Part 4). Net income 147,000 98,000 71,000 27,000 299 $ 26,701 Note: CGS can also be computed as follows: Sales of $245,000 X 60% = $147,000 6 6. Balance sheet: ROCKET COMPANY Balance Sheet June 30 Assets Current assets: Cash (Part 4) Accounts receivable (80% X $90,000) Inventory (Part 2) Total current assets. Buildings and equipment, net ($214,100+ $14,500 - $6,000). Total assets 8,401 72,000 9,000 89,401 222.600 $ 312,001 $ 23,400 Liabilities and Shareholders' Equity Current liabilities: Accounts payable (Part 2: 50% x $46,800) Shareholders' equity: Common shares $190,000 Retained earnings* 98,601 Total liabilities and shareholders' equity *Retained earnings, beginning. $ 75,400 Add net income. 26,701 Total 102,101 Less dividends 3,500 Retained earnings, ending. $ 98,601 288,601 $ 312,001 Create the following components of the Master Budget for ROCKET COMPANY in a Microsoft Excel Spreadsheet for the 2nd Quarter. To get full marks all Excel Cells have to be properly linked using Formulas and proper statement format has to be followed. Prepare ONLY the following budgets. You do not have to do the collection schedules, cash budget or the budgeted balanced sheet. Link the excel formulas so that question 5 can be answered without recreating the entire budget. 1. SALES BUDGET-Monthly and in total 2. MERCHANDISE PURCHASE BUDGET-monthly and in total 3. SELLING AND ADMINISTRATION BUDGET-monthly and in total 4. INCOME STATEMENT for the Quarter ended June 30th 5. What would be the operating income if the gross margin is reduced from 40% to 35%? What is the ending merchandise inventory