Proof-reading required. I have done my budgeting assignment and think that I have gone wrong. I need to know one thing in specific that I feel I didn't include is the 100,000$ payable at the start mentioned in 3. Please look at all scenarios A, B & C. Let me know if any mistakes arise. Also, I need the answer for question6.

Merchandising Firm Inc. Sales budget For the months December- April Dec Budgeted sales Selling price per merchandise Total sales Jan Feb 20,000 $40.00 70,000 $40.00 80,000 $40.00 $800,000.00 $2,800,000.00 $3,200,000.00 Schedule of Expected cash collections Accounts Receivable, beginning balance $0.00 Dec sales $240,000.00 $560,000.00 Jan sales $840,000.00 $1,960,000.00 Feb sales $960,000.00 March sales April sales Total cash collections $240,000.00 $1,400,000.00 $2,920,000.00 Mar April Total 40,000 $40.00 70,000 $40.00 280,000 $40.00 $1,600,000.00 $2,800,000.00 $11,200,000.00 $2,240,000.00 $480,000.00 $1,120,000.00 $840,000.00 $2,720,000.00 $1,960,000.00 $0.00 $800,000.00 $2,800,000.00 $3,200,000.00 $1,600,000.00 $840,000.00 $9,240,000.00 Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases Feb 70,000 32000 102,000 28,000 74,000 Mar 80,000 16000 96,000 32,000 64,000 40,000 28000 68,000 16,000 52,000 The above inventory budget is expressed in terms of the units of the product merchandise In terms of the purchase costs, the required purchase units are multiplied by the purchase price of each unit as sho Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases (units) purchase Price Total purchases Feb Mar 70,000 80,000 40,000 32000 16000 28000 102,000 96,000 68,000 28,000 32,000 16,000 74,000 64,000 52,000 $15.00 $15.00 $15.00 $1,110,000.00 $960,000.00 $780,000.00 e price of each unit as shown below Merchandise Firm Inc. Cash Budget For the months January- March Jan Cash balance, beginning Add: Receipts Collections from customers Total cash available Less disbursements Inventory merchandise Direct labor Rent Advertising Depreciation Selling and administration Total disbursements Excess of cash available over disbursments Financing Borrowing at the beginning Repayment at the end of the quarter Interest Total financing cash balance, ending Feb $50,000 Mar $38,000 $746,000 1,400,000 2,920,000 $1,450,000 $2,958,000 1,110,000 25,000 17,000 4,000 6,000 1050000 2,212,000 ($762,000) 960,000 25,000 17,000 4,000 6,000 1200000 2,212,000 $746,000 800,000 - 780,000 25,000 17,000 4,000 6,000 600000 1,432,000 $2,034,000 $0 - 800,000 $38,000 2,720,000 $3,466,000 $0 $746,000 ($800,000) 24000 ($776,000) $1,258,000 Total $834,000 $7,040,000 $7,874,000 $2,850,000 $75,000 $51,000 $12,000 $18,000 $2,850,000 $5,856,000 $2,018,000 $800,000 ($800,000) $24,000 $24,000 $2,042,000 Jan Costs of Goods sold Beginning inventory Add: purchases Costs of goods available for sale purchase price Feb March Less: ending merchandise 28,000 74,000 102,000 $15.00 $1,530,000.00 32,000 32,000 64,000 96,000 $15.00 $1,440,000.00 16,000 16,000 52,000 68,000 $15.00 $1,020,000.00 28,000 Cost of goods sold $480,000.00 $1,050,000.00 $240,000.00 $1,200,000.00 $420,000.00 $600,000.00 Merchandise Firm Inc. Budgeted Income Statement For The months January- March Sales Costs of goods sold Gross margin Operating Expenses: Rent Advertising Depreciation Selling and admistration expenses Total operating expense Net operating income Interest expense Net income Jan Feb March $2,800,000 $3,200,000 $1,600,000 1,050,000 1,200,000 600,000 $1,750,000 $2,000,000 $1,000,000 $17,000 $17,000 $4,000 $4,000 $6,000 $6,000 1,050,000 1,200,000 $1,077,000 $1,227,000 $673,000 $773,000 0 0 $673,000 $773,000 $17,000 $4,000 $6,000 600,000 $627,000 $373,000 -24,000 $397,000 AF211 Budget Project Due Tuesday, December 13. Prepare the following budgets listed below in good format for a merchandising company on a computer spreadsheet. Follow the format of the budgets shown in chapter 9 of your textbook. Place all budgets for each scenario (A,B or C) on a single page if possible. Your name, student ID #, and section number should appear on each page. 1. Prepare a sales budget for December through April. The selling price per unit is $40.00. Use the last five digits of your student identification number to fill in the blanks on the budgeted sales in units. If your number contains a 0 use 10 instead. For example, if the last five digits in your student ID number are 14607, the budgeted sales in units would be: December of the previous year January February March April 10,000 40,000 60,000 100,000 70,000 2. Prepare a purchases budget for January through March, and the first quarter in total. Assume that the company only sells one product that can be purchased at $15.00 per unit. The market for this product is very competitive and customers highly value service such as quality and on time delivery of the product. Also assume that currently it is company's inventory policy that ending inventory should equal 40% of next month's projected sales. 3. Prepare a cash budget for January through March and for the first quarter in total. The company maintains a minimum cash balance of $50,000.00, and this was the balance in the cash account on January 1. Past experience shows that 30% of sales are collected in the month of the sale, and 70% in the month following the sale. Labor cost is $25,000 per month in fixed salaries and a sales commission of $15 per unit. Other monthly expenses include $17,000 for rent, $4,000 for advertising, and $6,000 for depreciation. All costs are paid in the current month except inventory purchases, which are paid in the month following purchase (i.e. January purchases are paid in February). On January 1st there was an outstanding accounts payable balance of $100,000. The company has an open line of credit with a bank and can borrow at an annual rate of 12%. For simplification assume that all loans are made at the beginning of the month and repayments are made at the end, and interest is only paid at the time when repayment is made. Additionally, all loans and repayments (not the interest portion) can only be made in increments of $1000 and the company would like to pay its debts, or a portion thereof, as soon as it has enough cash to do so. 4. Prepare the Budgeted Income Statement based on the information given above. Label this budget scenario as A., 5. Repeat steps 2-4 for budget scenarios B and C using the following inventory policy assumptions: B. C. Desired Ending Inventory 90% 10% 6. Write a brief analysis of the three inventory policies and explain which policy the company should choose. Your write-up should include a discussion of the results you obtained from the analyses above as well as any other issues that need to be considered when deciding about a suitable inventory policy. Your report should be in the form of a 1 page Memo to the President of the company (make up a name). Assume that you are writing on behalf of a financial consultant advising the President about the company's inventory policy. Organization, grammar, and spelling are important. Note: You need to submit printouts of your analysis spreadsheets with all of the budgets in proper format, the one page memo in question 6, and a 'formula sheet' for one of the budgets showing that you used the spreadsheet program and not just typed everything in as if this is a MSWord document. Merchandising Firm Inc. Sales budget For the months December- April Dec Budgeted sales Selling price per merchandise Total sales Jan Feb 20,000 $40.00 70,000 $40.00 80,000 $40.00 $800,000.00 $2,800,000.00 $3,200,000.00 Schedule of Expected cash collections Accounts Receivable, beginning balance $0.00 Dec sales $240,000.00 $560,000.00 Jan sales $840,000.00 $1,960,000.00 Feb sales $960,000.00 March sales April sales Total cash collections $240,000.00 $1,400,000.00 $2,920,000.00 Mar April Total 40,000 $40.00 70,000 $40.00 280,000 $40.00 $1,600,000.00 $2,800,000.00 $11,200,000.00 $2,240,000.00 $480,000.00 $1,120,000.00 $840,000.00 $2,720,000.00 $1,960,000.00 $0.00 $800,000.00 $2,800,000.00 $3,200,000.00 $1,600,000.00 $840,000.00 $9,240,000.00 Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases Feb 70,000 72000 142,000 63,000 79,000 Mar 80,000 36000 116,000 72,000 44,000 40,000 63000 103,000 36,000 67,000 The above inventory budget is expressed in terms of the units of the product merchandise In terms of the purchase costs, the required purchase units are multiplied by the purchase price of each unit as sho Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases (units) purchase Price Total purchases Feb Mar 70,000 80,000 40,000 72000 36000 63000 142,000 116,000 103,000 63,000 72,000 36,000 79,000 44,000 67,000 $15.00 $15.00 $15.00 $1,185,000.00 $660,000.00 $1,005,000.00 e price of each unit as shown below Merchandise Firm Inc. Cash Budget For the months January- March Jan Cash balance, beginning Add: Receipts Collections from customers Total cash available Less disbursements Inventory merchandise Direct labor Rent Advertising Depreciation Selling and administration Total disbursements Excess of cash available over disbursments Financing Borrowing at the beginning Repayment at the end of the quarter Interest Total financing cash balance, ending Feb Mar $50,000 ($37,000) $971,000 1,400,000 2,920,000 $1,450,000 $2,883,000 1,185,000 25,000 17,000 4,000 6,000 1050000 2,287,000 ($837,000) 660,000 25,000 17,000 4,000 6,000 1200000 1,912,000 $971,000 800,000 - 1,005,000 25,000 17,000 4,000 6,000 600000 1,657,000 $2,034,000 $0 - 800,000 ($37,000) 2,720,000 $3,691,000 $0 $971,000 ($800,000) 24000 ($776,000) $1,258,000 Total $984,000 $7,040,000 $8,024,000 $2,850,000 $75,000 $51,000 $12,000 $18,000 $2,850,000 $5,856,000 $2,168,000 $800,000 ($800,000) $24,000 $24,000 $2,192,000 Jan Costs of Goods sold Beginning inventory Add: purchases Costs of goods available for sale purchase price Feb March Less: ending merchandise 63,000 79,000 142,000 $15.00 $2,130,000.00 32,000 72,000 44,000 116,000 $15.00 $1,740,000.00 16,000 36,000 67,000 103,000 $15.00 $1,545,000.00 28,000 Cost of goods sold $480,000.00 $1,650,000.00 $240,000.00 $1,500,000.00 $420,000.00 $1,125,000.00 Merchandise Firm Inc. Budgeted Income Statement For The months January- March Sales Costs of goods sold Gross margin Operating Expenses: Rent Advertising Depreciation Selling and admistration expenses Total operating expense Net operating income Interest expense Net income Jan Feb March $2,800,000 $3,200,000 $1,600,000 1,650,000 1,500,000 1,125,000 $1,150,000 $1,700,000 $475,000 $17,000 $17,000 $4,000 $4,000 $6,000 $6,000 1,050,000 1,200,000 $1,077,000 $1,227,000 $73,000 $473,000 0 0 $73,000 $473,000 $17,000 $4,000 $6,000 600,000 $627,000 ($152,000) -24,000 ($128,000) Merchandising Firm Inc. Sales budget For the months December- April Dec Budgeted sales Selling price per merchandise Total sales Jan Feb 20,000 $40.00 70,000 $40.00 80,000 $40.00 $800,000.00 $2,800,000.00 $3,200,000.00 Schedule of Expected cash collections Accounts Receivable, beginning balance $0.00 Dec sales $240,000.00 $560,000.00 Jan sales $840,000.00 $1,960,000.00 Feb sales $960,000.00 March sales April sales Total cash collections $240,000.00 $1,400,000.00 $2,920,000.00 Mar April Total 40,000 $40.00 70,000 $40.00 280,000 $40.00 $1,600,000.00 $2,800,000.00 $11,200,000.00 $2,240,000.00 $480,000.00 $1,120,000.00 $840,000.00 $2,720,000.00 $1,960,000.00 $0.00 $800,000.00 $2,800,000.00 $3,200,000.00 $1,600,000.00 $840,000.00 $9,240,000.00 Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases Feb 70,000 8000 78,000 7,000 71,000 Mar 80,000 4000 84,000 8,000 76,000 40,000 7000 47,000 4,000 43,000 The above inventory budget is expressed in terms of the units of the product merchandise In terms of the purchase costs, the required purchase units are multiplied by the purchase price of each unit as sho Merchandising Firm Inc. Inventory Purchases budget For the months Jan- March Jan Budgeted sales Add Desired ending merchandising inventory Total Needs Less beginning merchandise inventory Required purchases (units) purchase Price Total purchases Feb Mar 70,000 80,000 40,000 8000 4000 7000 78,000 84,000 47,000 7,000 8,000 4,000 71,000 76,000 43,000 $15.00 $15.00 $15.00 $1,065,000.00 $1,140,000.00 $645,000.00 e price of each unit as shown below Merchandise Firm Inc. Cash Budget For the months January- March Jan Cash balance, beginning Add: Receipts Collections from customers Total cash available Less disbursements Inventory merchandise Direct labor Rent Advertising Depreciation Selling and administration Total disbursements Excess of cash available over disbursments Financing Borrowing at the beginning Repayment at the end of the quarter Interest Total financing cash balance, ending Feb $50,000 Mar $83,000 $611,000 1,400,000 2,920,000 $1,450,000 $3,003,000 1,065,000 25,000 17,000 4,000 6,000 1050000 2,167,000 ($717,000) 1,140,000 25,000 17,000 4,000 6,000 1200000 2,392,000 $611,000 800,000 - 645,000 25,000 17,000 4,000 6,000 600000 1,297,000 $2,034,000 $0 - 800,000 $83,000 2,720,000 $3,331,000 $0 $611,000 ($800,000) 24000 ($776,000) $1,258,000 Total $744,000 $7,040,000 $7,784,000 $2,850,000 $75,000 $51,000 $12,000 $18,000 $2,850,000 $5,856,000 $1,928,000 $800,000 ($800,000) $24,000 $24,000 $1,952,000 l Jan Costs of Goods sold Beginning inventory Add: purchases Costs of goods available for sale purchase price Feb March Less: ending merchandise 7,000 71,000 78,000 $15.00 $1,170,000.00 8,000 8,000 76,000 84,000 $15.00 $1,260,000.00 4,000 4,000 43,000 47,000 $15.00 $705,000.00 7,000 Cost of goods sold $120,000.00 $1,050,000.00 $60,000.00 $1,200,000.00 $105,000.00 $600,000.00 Merchandise Firm Inc. Budgeted Income Statement For The months January- March Sales Costs of goods sold Gross margin Operating Expenses: Rent Advertising Depreciation Selling and admistration expenses Total operating expense Net operating income Interest expense Net income Jan Feb March $2,800,000 $3,200,000 $1,600,000 1,050,000 1,200,000 600,000 $1,750,000 $2,000,000 $1,000,000 $17,000 $17,000 $4,000 $4,000 $6,000 $6,000 1,050,000 1,200,000 $1,077,000 $1,227,000 $673,000 $773,000 0 0 $673,000 $773,000 $17,000 $4,000 $6,000 600,000 $627,000 $373,000 -24,000 $397,000