Problem 5-35 Sunland Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firms marketing director, has completed the following sales forecast. Month Sales Month Sales January $901,000 July $1,503,700 February $1,009,000 August $1,503,700 March $901,000 September $1,604,500 April $1,158,600 October $1,604,500 May $1,257,200 November $1,503,700 June $1,404,500 December $1,700,000 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. Sunlands 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, Sunlands 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 months sales, are paid in the month incurred. General and administrative expenses are projected to be $1,572,800 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 $ 329,900 Advertising 374,100 Property taxes 140,000 Insurance 194,600 Utilities 183,500 Depreciation 350,700 Total $ 1,572,800 Operating income for the first quarter of the coming year is projected to be $322,400. Sunland is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. Sunland 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 $59,400. Correct answer. 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 May June Total Cash Receipts February sales $Entry field with correct answer 403,600 $Entry field with correct answer $Entry field with correct answer $Entry field with correct answer 403,600 March sales Entry field with correct answer 540,600 Entry field with correct answer 360,400 Entry field with correct answer Entry field with correct answer 901,000 April sales Entry field with correct answer Entry field with correct answer 695,160 Entry field with correct answer 463,440 Entry field with correct answer 1,158,600 May sales Entry field with correct answer Entry field with correct answer Entry field with correct answer 754,320 Entry field with correct answer 754,320 Totals $Entry field with correct answer 944,200 $Entry field with correct answer 1,055,560 $Entry field with correct answer 1,217,760 $Entry field with correct answer 3,217,520 Accounts Receivable balance at the end of second quarter of 2015 $Entry field with correct answer 1,907,380 SHOW SOLUTION LINK TO TEXT LINK TO VIDEO Correct answer. 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 0.) Purchases Budget April May June Total Purchases April COGS $Entry field with correct answer 139,032 $Entry field with correct answer $Entry field with correct answer $Entry field with correct answer 139,032 May COGS Entry field with correct answer 352,016 Entry field with correct answer 150,864 Entry field with correct answer Entry field with correct answer 502880 June COGS Entry field with correct answer Entry field with correct answer 393,260 Entry field with correct answer 168,540 Entry field with correct answer 561,800 July COGS Entry field with correct answer Entry field with correct answer Entry field with correct answer 421,036 Entry field with correct answer 421,036 Totals $Entry field with correct answer 491,048 $Entry field with correct answer 544,124 $Entry field with correct answer 589,576 $Entry field with correct answer 1,624,748 SHOW SOLUTION LINK TO TEXT LINK TO VIDEO Correct answer. 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 May June March purchases $Entry field with correct answer 108,132 $Entry field with correct answer $Entry field with correct answer April purchases Entry field with correct answer 368,286 Entry field with correct answer 122,762 Entry field with correct answer May purchases Entry field with correct answer Entry field with correct answer 408,093 Entry field with correct answer 136,031 June purchases Entry field with correct answer Entry field with correct answer Entry field with correct answer 442,182 $Entry field with correct answer 476,418 $Entry field with correct answer 530,855 $Entry field with correct answer 578,213 Accounts Payable balance at the end of second quarter of 2015 $Entry field with correct answer 147,394 SHOW SOLUTION LINK TO TEXT LINK TO VIDEO Partially correct answer. Your answer is partially correct. Try again. 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 $Entry field with correct answer 59,400 $Entry field with incorrect answer 59,466 $Entry field with incorrect answer 59,845 $Entry field with incorrect answer 109,436 Entry field with correct answer Entry field with correct answer 944,200 Entry field with correct answer 1,055,560 Entry field with correct answer 1,217,760 Entry field with correct answer 3,217,520 Entry field with correct answer Entry field with correct answer 1,003,600 Entry field with incorrect answer 1,115,026 Entry field with incorrect answer 1,277,605 Entry field with incorrect answer 3,326,956 Entry field with correct answerEntry field with correct answer Entry field with correct answer Entry field with correct answer 27,492 Entry field with correct answer 27,492 Entry field with correct answer 27,492 Entry field with correct answer 82,476 Entry field with correct answer Entry field with correct answer 31,175 Entry field with correct answer 31,175 Entry field with correct answer 31,175 Entry field with correct answer 93,525 Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with correct answer 35,000 Entry field with correct answer 35,000 Entry field with correct answer Entry field with correct answer 16,217 Entry field with correct answer 16,217 Entry field with correct answer 16,217 Entry field with correct answer 48,651 Entry field with correct answer Entry field with correct answer 15,292 Entry field with correct answer 15,292 Entry field with correct answer 15,292 Entry field with correct answer 45,876 Entry field with correct answer Entry field with correct answer 476,418 Entry field with correct answer 530,855 Entry field with correct answer 578,213 Entry field with correct answer 1,585,486 Entry field with correct answer Entry field with correct answer 128,960 Entry field with correct answer Entry field with correct answer Entry field with correct answer 128,960 Entry field with correct answer Entry field with correct answer 347,580 Entry field with correct answer 377,160 Entry field with correct answer 421,350 Entry field with correct answer 1,146,090 Entry field with correct answer Entry field with correct answer 1,043,134 Entry field with correct answer 998,191 Entry field with correct answer 1,124,739 Entry field with correct answer 3,166,064 Entry field with correct answer Entry field with correct answer (39,534) Entry field with incorrect answer 116,835 Entry field with incorrect answer 152,866 Entry field with incorrect answer 160,892 Entry field with correct answer Entry field with correct answer 50,000 Entry field with correct answer 50,000 Entry field with correct answer 50,000 Entry field with correct answer 50,000 Entry field with correct answer Entry field with incorrect answer (60,466) Entry field with incorrect answer 66,835 Entry field with incorrect answer 102,866 Entry field with incorrect answer 110,892 Financing: Entry field with correct answer Entry field with incorrect answer 99,000 Entry field with correct answer Entry field with correct answer Entry field with incorrect answer 99,000 Entry field with correct answer Entry field with correct answer Entry field with correct answer (56,000) Entry field with incorrect answer (43,000) Entry field with incorrect answer (99,000) Entry field with correct answer Entry field with correct answer Entry field with incorrect answer (990) Entry field with incorrect answer (430) Entry field with incorrect answer (1,420) Entry field with correct answer Entry field with incorrect answer 99,000 Entry field with incorrect answer (56,990) Entry field with incorrect answer (43,430) Entry field with incorrect answer (1,420) Ending Cash Balance $Entry field with incorrect answer 59,466 $Entry field with incorrect answer 59,845 $Entry field with incorrect answer 109,436 $Entry field with incorrect answer 109,436 Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT LINK TO VIDEO Question Attempts: 1 of 2 used