Prepare a schedule of expected collections from customers. Screenshot Tops, Inc. Schedule of Collections from Customers For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year Accounts receivable 1/1/xx 0 First quarter Second quarter Third quarter Fourth quarter Total collections 5. Michael learned from talking with Jayne that the supplier is so focused on making quality shirts that many times the shirts are not available for several days. She encouraged Michael to maintain an ending inventory of shirts equal to 25% of the next quarters sales. Prepare a shirt purchases budget for shirts using the format provided. Screenshot Tops, Inc. Shirt Purchases Budget For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year

Shirts to be silk-screened Plus: Desired ending inventory Total shirts required Less: Beginning inventory Total shirts to purchase Cost per shirt Total cost of shirt purchases 6. Prepare a schedule of expected payments for purchases. Screenshot Tops, Inc. Schedule of Expected Payments for Purchases For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year Accounts payable 1/1/xx 0 First quarter Second quarter Third quarter Fourth quarter Total payments 7. Prepare a silk-screen labor budget. Screenshot Tops, Inc. Silk-screen Labor Budget For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year Units to be produced Silk-screen labor hours per unit Total required silk-screen labor hours Silk-screen labor cost per hour Total silk-screen labor cost 8. Prepare a selling and administrative expenses budget for Screenshot Tops, Inc. for the year ending December 31, 20xx. Screenshot Tops, Inc. Selling and Administrative Expenses Budget For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year Variable expenses: Sales commissions Total variable expenses Fixed expenses: Advertising

Rent Sales salaries Office salaries Depreciation Property taxes and insurance Total fixed expenses Total selling and administrative expenses 9. Prepare a silk-screen overhead expenses budget for Screenshot Tops, Inc. for the year ending December 31, 20xx. Screenshot Tops, Inc. Silk-screen Overhead Expenses Budget For the Year Ended December 31, 20xx Quarter 1 2 3 4 Year Variable expenses: Ink Maintenance Utilities Graphics design Total variable expenses Fixed expenses: Rent Maintenance Utilities Graphics design Property taxes and insurance Depreciation Total fixed expenses Total silk-screen overhead Direct silk-screen hours Overhead rate per silk-screen hour 10. Using the information found in the case and the previous budgets, prepare a budgeted income statement for Screenshot Tops, Inc. for the year ended December 31, 20xx. Screenshot Tops, Inc. Budgeted Income Statement For the Year Ended December 31, 20xx Sales Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense

Income before income taxes Income tax expense Net income 11. Using the information found in the case and the previous budgets, prepare a cash budget for Screenshot Tops, Inc. for the year ended December 31, 20xx. Screenshot Tops, Inc. Cash Budget For the Four Quarters Ended December 31, 20xx Quarter 1 2 3 4 Beginning cash balance Add: Receipts Collections from customers Total available cash Less: Disbursements Payments for shirt purchases Silk-screen labor Silk-screen overhead Selling and administrative expenses Payment for equipment purchase Total disbursements Excess (deficiency) of available cash over disbursements Financing Borrowings Ending cash balance 12. Using the information contained in the case and the previous budgets, prepare a budgeted balance sheet for Screenshot Tops, Inc. at December 31, 20xx. Screenshot Tops, Inc. Budgeted Balance Sheet December 31, 20xx Assets Cash Accounts receivable Shirt inventory Equipment Less: Accumulated depreciation Total assets

Liabilities and Stockholders Equity Accounts payable Notes payable Interest payable Taxes payable Total liabilities Common stock Retained earnings Total stockholders equity Total liabilities and stockholders equity 13. Using the information contained in the case and the previous budgets, a) calculate the estimated contribution margin per unit for 20xx. (Hint: Silk-screened labor and the taxes are both fixed costs.) b) Calculate the total estimated fixed costs for 20xx (including interest and taxes). c) Compute the break-even point in units and dollars for 20xx. 14. Michael is very disappointed that the company did not have an income of $25,000 for its first year of budgeted operations as he had wanted. How many shirts would the company have had to sell in order to have a pretax profit of $25,000? (Ignore changes in income tax expense.) 15. Why does the companys cash balance differ from the net income for the year? 16. Do you think it was a good idea to offer Cary a salary plus 10% of sales? Why or why not? What other thoughts do you have?

Check Figures: Total sales $ 800,000 Total collections $ 742,400 Total purchases $ 545,000 Total payments $ 464,000 Total labor hours 6,000 Total fixed selling and admin $ 23,280 Total variable overhead $ 46,650 Income before taxes $ 24,670 Ending cash $ 20,380 Total assets $ 137,270

PLEASE SHOW CALCULATIONS IN EXCEL