Problem 5-35 Coronado 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 Sales $904,800 $1,009,200 $904,800 $1,160,000 $1,257,400 $1,401,000 Month July August September October November December Sales $1,501,600 $1,501,600 $1,602,400 $1,602,400 $1,501,600 $1,704,800 May June 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. Coronado'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, Coronado'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 $1,575,600 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 $ 326,900 376,600 142,800 196,200 179,300 353,800 $ 1,575,600 Total Operating income for the first quarter of the coming year is projected to be $321,400. Coronado is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. . Coronado 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. 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 May June April Total Cash Receipts February sales 403680 403680 March sales 61920 904800 April sales 596000 464000 1160000 May sales 754440 754440 Totals 946560 1057920 1218440 3222920 1903960 Accounts Receivable balance at the end of second quarter of 2015_slu 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 > April COGS 139200 D May COGS 1 352072 150888 June COGS 392280 168120 July COGS 420448 Totals T 491272J 54 543168 588568 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 .) Cash Payments Budget April May June March purchases 8344 April purchases T 8454 2818 May purchases 407376 135792 June purchases 441426 476798 76798 53019 577218 147142 Accounts Payable balance at the end of second quarter of 2015 $ Prepare the cash 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 Budget April May June Quarter Beginning Cash balance 57700 50985 111575 57700 6 > Collection from Sales 946560 1057920 1218440 9 3222 Total cash available to spend 1004260 1108905 1330015 3280620 Less: disbursements | Payments for inventory 476798 530194 T 577218 T 1584210 Wages 1 T 348000|| 377220 420300 1145520 Salaries 27242 27242 27242 81725 1 Advertising 31383 31383 31383 94150 Property taxes 35700 JT T 35700 1 16350 Insurance 16350 16350 49050 Utilities 14942 14942 14942 44825 T Income taxes 128560 128560 Total cash disbursements 1043275 997331 3135 3163740 Cash excess (deficiency) (39015) 111575 T 206880|| 11688 Minimum cash balance T 50000 50000 50000 50000 Cash excess (needed) 89015 57877 156880 66880 Financing: Borrowings 90000 90000 Repayments 90000 (90000) Interest 2700 2700 Total financing 90000 (92700) (2700) Ending Cash Balance 50985 111575 114180 114180