Please fill out the cash budget for the second quarter
Problem 5-35 Sunland Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the rm's marketing director, has completed the following sales forecast. Month Sales Month Sales January $909,000 July $1,506,100 February $1,006,600 August $1,506,100 March $909,000 September $1,609,500 April $1,152,600 October $1,609,500 May $1,257,100 November $1,506,100 June $1,405,000 December $1,708,200 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. o All sales are made on credit. 0 Sunland's excellent record in accounts receivable collection is expected to continue, with 60% of billings collected in the month after sale and the remaining 40% collected two months after the sale. 0 Cost of goods sold, Sunland's largest expense, is estimated to equal 40% of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30% during the month of sale. For example, in April, 30% of April cost of goods sold is purchased and 70% of May cost of goods sold is purchased. a All purchases are made on account. Historically, 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase. a Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred. o General and administrative expenses are projected to be $1,564,000 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benets $ 320,900 Advertising 379,100 Property taxes 137,600 Insurance 192,800 Utilities 184,000 Depreciation 349,600 Total $ 1,564,000 0 Operating income for the first quarter of the coming year is projected to be $327,400. Sunland is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. 0 Sunland maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $58,600. Prepare the cash budget for the second quarter . ( Round answers to O decimal places , e .g. 5, 275 . Enter answers in necessary fields only . Leave other fields blank . Do not enter O . ) April May June Quarter | X` Beginning Cash balance* | X` Collection from Sales |1 X` Total cash available to spend $ Less : $\\ disbursements Wages Salaries DO OOOOOO TO DODODD Advertising DOODOO DODOOD Property taxes Insurance UtilitiesJ\\J\\J\\) k Total nancing I L J - - - E] l. w m ' m ' I: ' I: ' Payments for inventrv - - - - ' I3: I m ' a ' m ' k Total cash disbursements - - - - w '3 ' a ' a ' a ' w '3 ' a ' a ' a ' l. w '3 ' a ' In ' In ' Financing: .- w a ' In ' In ' - - - E l. w a ' m ' a 1 - - - E] w '3 ' a ' - - - E] Ending Cash Balance
