Pro Forma Income Statement Problem:

a$.$ Last January there were $7,000$ sales at $$45$ each. This year the company expects to sell the same amount in January, and then increase sales by $3\mathrm{.}5\%$ each month in the following year. The company typically has a $50/50$ ratio for credit and cash sales in any given month.

b$.$ Sales made on account are typically collected $30\%$ in the month of the sale and $70\%$ in the month following the sale.

c$.$ Budgeted COGS are expected to be $55\%$ of sales each month, and the company budgets for an ending inventory balance of $15\%$ of next month's COGS. All inventory purchases are made on account.

d$.$ The company's cash policy pertaining to inventory purchases is to pay all bills as they become due. An analysis of historic payables estimates that $40\%$ of invoices require immediate payment, and $60\%$ are due the following month.

e$.$ The company's budgeted selling and admin expenses are shown on the Supplementary Schedules tab. The company has a policy to pay employees, rent on the office, and equipment maintenance contractors in the month the expenses are incurred. Insurance is pre$-$paid twice per year, on January and July $15$th$.$ All other expenses that require cash payment will be paid in the month following when the expense is incurred.

f$.$ The payments for capital budget acquisitions can be found on the supplementary schedule tab.

g$.$ The company maintains a cash balance of at least $$50,000$ at the end of each month. The company can draw on a line of credit with a debt maximum of $$1,500,000,$ and draws on the account in increments of $$1,000.$ Payments are made in any increment. All borrowing and repayment is done on the last day of each month. The line of credit interest rate and balance are listed below. Line of credit :

$$20,000\mathrm{.}00$ Loan balance as of january $1$st

$6\mathrm{.}00\%$ annual interest rate

$?$ Find Montly interest rate

Find Cash Budget for month january febrary and march if

Beginning cash balance january $=50,000$

Add cash receipts

Cash available

Less disbursements:

For inventory purchases

For S&A expenses

For capital expenditures

Interest expenses at $6\%$ per year

Total budgeted disbursements

Cash surplus $($shortage$)$

Financing activity:

Borrowing $($repayment$)$

Ending cash balane

Budgeted Selling & Admin Expenses

December

January

February

March

Cleaning supplies

$4,200$

$4,400$

Equipment depreciation

$8,500$

$8,500$

$4,400$

$4,400$

Equipment maintenance expense

$1,800$

$8,500$

$8,500$

Insurance expense

$2,200$

$2,200$

$2,200$

Miscellaneous expenses

$1,650$

$1,200$

$1,880$

$1,880$

$1,880$

Rent expense

$1,450$

$1,450$

$1,450$

Salary expense

$5,600$

$5,800$

$5,800$

$5,800$

Sales Commissions $(3\%$ of sales$)$

$89,000$

$91,670$

$91,670$

$91,670$

Total S&A Expense

$22,466$

$134,416$

$9,450$

$125,350$

$9,781$

$10,123$

$125,681$

$126,023$