Problem 4 Franco Carriage Company is preparing its budget for the coming year. Below is information about the 2nd quarter, which is not yet finished. The budgeted income statement for the 2nd quarter is Franco Carriage Company Budgeted Income Statement For the 2nd Quarter Ended 200x June $32,000 21,000 11,000 Sales/Revenue $20,000$21,000 $25,000 Cost of goods sold 12.00014,000 Gross profit 8,000 7,000 9,500 Less Selling expenses Administrative expenses 2,500 700 5,200 3,200 350 5,550 1450 3,400 3.100 6,500 $3.000 4,200 3.600 7,800 3,200 Total Net income 2800 The company has also completed the purchases budget, as follows: Franco Carriage Company Purchases Budget For the 2nd Quarter Ended 200x ril Ma $12,000$14,000 3,875 $15,500 5.250 Budgeted cost of goods sold Plus desired ending inventor Total inventory needs Less: beginning inventor Budgeted purchases 17,875 3,500 $13,000 $14.375 3,500 15,500 2,500 20,750 3,875 $16.875 The company needs to prepare its budgeted cash receipts, budgeted cash payments for purchases, and monthly cash budget schedules for April, May and June The following additional information is available: Budgeted Income statement for July 200x: Sales $32,000 Cost of goods sold Gross profit Less Selling expenses Administrative expenses 11.000 4,200 3,600 Total Net income 3.200 1, 2. 73% of monthly sales are on account (ie., for credit). The remainder is for cash Credit sales are collected as follows 20% in the month of credit sales 55% in the month following the credit sales The remainder in the 2nd month following the credit sales 3. Total budgeted sales for February are $15,000 4. Total budgeted sales for March are $16,000 5. The company assumes it would pay for budgeted purchases 50% in the month of purchase and 50% in the month following the purchase 6. Budgeted purchases for March are $12,000 7. For the months of April and May, the company must make a $5,500 payment for an outstanding bank note 8. Franco Carriage must maintain a cash balance of at least $5,000 at the end of each month. 9. The budgeted cash balance at April 1 is $5,100 10. When ending cash balances are less than $5,000, they make a short-term borrowing from their local bank. However, all borrowings must be made in multiples of $100. These short-term loans are repaid at the end of the year, which is December 31t Required a. Prepare a monthly schedule of budgeted operating cash receipts for April, May, and June b. Prepare a monthly schedule of budgeted cash payments for purchases for April, May, and June c. Prepare a monthly cash budget for April, May, and June, including borrowings from the company's local bank as needed to maintain the minimum cash balance. Problem 4 Franco Carriage Company is preparing its budget for the coming year. Below is information about the 2nd quarter, which is not yet finished. The budgeted income statement for the 2nd quarter is Franco Carriage Company Budgeted Income Statement For the 2nd Quarter Ended 200x June $32,000 21,000 11,000 Sales/Revenue $20,000$21,000 $25,000 Cost of goods sold 12.00014,000 Gross profit 8,000 7,000 9,500 Less Selling expenses Administrative expenses 2,500 700 5,200 3,200 350 5,550 1450 3,400 3.100 6,500 $3.000 4,200 3.600 7,800 3,200 Total Net income 2800 The company has also completed the purchases budget, as follows: Franco Carriage Company Purchases Budget For the 2nd Quarter Ended 200x ril Ma $12,000$14,000 3,875 $15,500 5.250 Budgeted cost of goods sold Plus desired ending inventor Total inventory needs Less: beginning inventor Budgeted purchases 17,875 3,500 $13,000 $14.375 3,500 15,500 2,500 20,750 3,875 $16.875 The company needs to prepare its budgeted cash receipts, budgeted cash payments for purchases, and monthly cash budget schedules for April, May and June The following additional information is available: Budgeted Income statement for July 200x: Sales $32,000 Cost of goods sold Gross profit Less Selling expenses Administrative expenses 11.000 4,200 3,600 Total Net income 3.200 1, 2. 73% of monthly sales are on account (ie., for credit). The remainder is for cash Credit sales are collected as follows 20% in the month of credit sales 55% in the month following the credit sales The remainder in the 2nd month following the credit sales 3. Total budgeted sales for February are $15,000 4. Total budgeted sales for March are $16,000 5. The company assumes it would pay for budgeted purchases 50% in the month of purchase and 50% in the month following the purchase 6. Budgeted purchases for March are $12,000 7. For the months of April and May, the company must make a $5,500 payment for an outstanding bank note 8. Franco Carriage must maintain a cash balance of at least $5,000 at the end of each month. 9. The budgeted cash balance at April 1 is $5,100 10. When ending cash balances are less than $5,000, they make a short-term borrowing from their local bank. However, all borrowings must be made in multiples of $100. These short-term loans are repaid at the end of the year, which is December 31t Required a. Prepare a monthly schedule of budgeted operating cash receipts for April, May, and June b. Prepare a monthly schedule of budgeted cash payments for purchases for April, May, and June c. Prepare a monthly cash budget for April, May, and June, including borrowings from the company's local bank as needed to maintain the minimum cash balance