****PLEASE NOTE THE BOX ON THE BOTTOM RIGHT.****
Garden Salet, Inc. December 31, 2017 24,500 5 5 Cash Accounts Receivable Inventory Prepaid Rent 5 5 5 5 50.000 112.500 60,300 12.000 Account Payable Working Capital Line Accrued Interest Payable Note Payable $ 50.000 5 $ 200,000 780,200 Prop, Plant Equip Accum Depr $ 5 Net PP5E 5 Common Stock Retained Earnings 900,000 200,000) 300,000 5 2,034,800 Total Assets 5 2034 200 . . . . . You are the Business Manager of Garden Sales, Ine and the bank has asked you to prepare a cash and earnings budget/forecast and Pro-Forma Balance Sheet and Income Statement for the next quarter. After your discussion with the various departments, you have come up with the following information/assumptions: November 2017 and December 2017 sales were $100,000, each month Sales for the following three months will increase by $2.500 each month, beginning January through April. Cost of Sales represents 60% of sales, each month. Cash Operating Expenses are 20% of sales, exclusive of Depreciation expense Depreciation Expense is $6,500 per month and prepaid rent is amortized at $1,000 per month of the month's sales, 25% is collected as cash with the remaining placed on customer's account. Customer's accounts are usually paid off over a 2 month period (50% each month) beginning the month following the sale The CFO just informed you that one customer has filed bankruptcy therefore, $15,000 from Nov A/R Sales will be written off in Jan to Bad Debt Exp. To maintain sufficient inventory, the company purchases 100% of the next month's cost of sales. They pay for 60%, in cash, in the month they purchase and pay the remaining 40% in the following month. In March, the company is planning on replacing an outdated machine. The new machine will cost $15,000. The old machine originally cost $10,000, with a Net Book Value of $2,000 and will be sold for $4,000 The Company does not pay or accrue for taxes until the end of December The Company plans to pay a cash dividend of $7,500 at the end of March. Assume all operating expenses incurred during the month are paid, in cash, during the same month incurred The Note Payable requires a principal payment of $22,000, plus interest of $1,500, at the end of March. For this note, no interest is Accrual/Expense until interest is paid The minimum cash month end balance required according to the bank agreement is $65,000 for any given month beginning Jan 30, 2018 A working capital line of credit is available, up to $100,000, and if needed, money is taken out at the beginning of the month. Interest is 2% per month. Interest is paid on the working capital line when principal payments are paid on the debt; at the end of any given month. Interest is accrued on the working capital line effective the beginning of the month when money is received. 1. Prepare a detailed Cash Budget/Forecast for each month of Jan, Feb and March, 2018 2. Prepare an Income Statement for the 3-month period ending March 2018 (good form) 3. Prepare a Balance Sheet as of March 31, 2018 (good form) 4. Assignment must be turned in as HAND WRITTEN document. Check Figures for 03/31 Net Income: (3mo) $25,115.18 Total Assets: $1,052,300.00 . . Garden Sales, Inc. December 31, 2017 s 5 24,600 Cash Accounts Receivable Inventory Prepaid Rent s u un 50,000 112,500 50,300 12,000 Account Payable Working Capital Line Accrued Interest Payable Note Payable 5 50,000 Prop, Plant & Equip Accum Depr s 5 Net PP&E S 900,000 (100.000) 800,000 Common Stock Retained Earnings una 200,000 760,200 Total Assets 5 1.034.800 5 1,034,800
