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 January February March April May June Sales $900,500 $1,006,300 $900,500 $1,152,600 $1,254,200 $1,408,000 Month July August September October November December Sales $1,503,000 $1,503,000 $1,607,400 $1,607,400 $1,503,000 $1,704,800 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 Property taxes Insurance Utilities Depreciation Total $ 321,400 379,900 141,600 193,100 179,100 347,500 $ 1,562,600 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 balance on April 1 is $57,700. Your answer is partially correct. Try again. Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) 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 0.) Purchases Budget May June April Total Purchases 138312 April COGS May COGS 501680 563200 June COGS 394240 1 68960 T July COGS 420840 T 420840 Totals J 489488] 54474 1624032 SHOW SOLUTION LINK TO TEXT LINK TO VIDEO 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 March purchases April purchases May purchases 408558 T 136186 442350 June purchases 474813 530930 578536 Accounts Payable balance at the end of second quarter of 2015 $ Financing: 2 T Borrowings 58000 58000 T Repayments 000) (58000) Interest (1160) (1160) T Total financing 58000 (59160) (1160) Ending Cash Balance 50335 76352 194184 Click if you would like to Show Work for this question: Open Show Work