Prepare the cash budget for the second quarter.
*Problem 5-35 Concord Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm's marketing director, has completed the following sales forecast. Month Sales Month Sales $1,503,000 $1,503,000 $900,500 September $1,607,400 $1,607,400 $1,254,200 November $1,503,000 $1,408,000 December $1,704,800 January $900,500 July February $1,006,300 August March ril $1,152,600 October une Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information All sales are made on credit . Concord'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 . Cost of goods sold, Concord'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 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 . Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred General and administrative expenses are projected to be $1,562,600 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 benefits Advertising $321,400 379,900 141,600 193,100 179,100 347,500 $1,562,600 Property taxes Insurance Utilities Depreciation Total Operating income for the first quarter of the coming year is projected to be $320,500. Concord is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. Concord 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 baac on April 1 is $57,700 Your answer is correct Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Receipts Budget April June Total Cash Receipts February sales S402,520 402,52 March sales 540,300 860,200 9,500 April sales 691,56 61,040 1,152,60 May sales ' li 52,520 1752,5201 Totals 942,820 1,051,76 1,213,560 $3,208,14 Accounts Receivable balance at the end of second quarter of 2015 $11,909,68 Your answer is correct Prepare the purchases budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter o.) Purchases Budget April May June Total Purchases April COGS 138,312S138,312 501,68 563,20 420,84 May COGS 351,176150,50 June COGS July COGS 394,240 168,96 420,84 Totals S 489,488 el544, 744 d589,800 624,033 Your answer is correct. Prepare the cash payments budget for the second quarter. (Round answers to 0 decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Payments Budget April 107,69 367,116 122,372 May June March purchases April purchases 3 May purchases June purchases 442,35 74,813 $530,930 $578,53 Accounts Payable balance at the end of second quarter of 2015 $147.45 Your answer is partially correct. Try again Prepare the cash budget for the second quarter. (Round answers to decimal places, e.g. 5,275. Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Budget May April June Quarter Beginning Cash balance Collection from Sale rotal cash available to spen Less:Idisbursements br> Payments for invento alarie Advertisin Pro taxe nsuranc ncome taxe Total cash disbursements ash excess (deficiency) br> IMinimum cash balancecbrbr ash excess (needed)
Ending Cash Balance
