Question 5 - Cash Budget (30 marks) Mountain Sports has aquired an open line of credit up to a maximum of $350,000. It will be necessary to convince the bank manager of this new Canmore branch ability to repay its line of credit including any interest. Management has provided the following list of assumptions to help in the preparation of the cash budget (note: you will need to use the projected income statement provided in Question 4 to complete the cash budget): 1. Beginning cash balance invested by owners $ 53,000 Quarter 1 Quarter 2 20% Quarter 3 Quarter 4 28% 24% 28% 2. Sales by quarter (as % of total projected sales) 5 3. Type of collections from customers: Cash Sales 3 Credit Sales (accounts receivable) 43% 57% 5 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 5 4. Merchandise purchases eement. Learn more A1 V fx Question 5 - Cash Budget (30 marks) F B D E 14 15 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 16 17 4. Merchandise purchases 18 Merchandise purchases (cost of goods sold) are all paid in the quarter following purchase. (Quarter 1 purchases are 19 20 5. Operating expenses 21 All other operating expenses (all expenses except cost of goods sold) are paid on a monthly basis. 22 23 6. Required investment in equipment paid in cash in the first quarter $ 136,000 24 25 7. Quarterly income tax payments paid in cash $ 8,000 26 27 8. Minimum cash balance $ 24,000 28 29 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. 30 31 Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made as requested by the company's bank = Case Intro 01 02 Calculation Mode: Automatic Q3 Q4 Q5 Q6 + Workbook Statirti A D E Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. F 30 31 Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made, as requested by the company's bank. 32 Mountain Sports Cash Budget For the year ended December 31 33 34 35 36 37 Percent of Sales Estimated Sales 1 20% $105,200 Quarter 2 28% $147,280 3 24% $126,240 4 28% $147,280 Year Summary 100% $526,000 N 38 39 CASH BALANCE, Beginning 40 Collections from customers: 41 Cash Sales 42. Credit Sales To 53,000 Rei cas Can 4. 1 disb Case Intro 01 Calculation Mode: Automatic Q2 Q3 Q4 Q5 Q6 + Workbook Stot D B Cash Budget For the year ended December 31 E F 33 34 35 36 Percent of Sales 37 Estimated Sales 1 20% $105,200 Quarter 2 28% $147,280 3 24% $126,240 4 28% $147,280 Year Summary 100% $526,000 $ 53,000 38 39 CASH BALANCE, Beginning 40 Collections from customers: 41 Cash Sales 42 Credit Sales 43 CASH AVAILABLE 44 Less: Cash Payments 45 Merchandise purchases (COGS) 46 Sales Commissions 47 Advertising 48 Property Taxes 49 Rent 50 Salaries & Wages 51 Equipment Purchase 52 Income tax Installment 53 Total Disbursements you more control. Your organization's admin allows you to use several clo optional cloud-backed services are provided to you under the Microsoft Services Agreement. Learn more A1 fx Question 5 - Cash Budget (30 marks) B D E F 47 Cash Sales 42 Credit Sales 43 CASH AVAILABLE 44 Less: Cash Payments 45 Merchandise purchases (COGS) 46 Sales Commissions 47 Advertising 48 Property Taxes 49 Rent 50 Salaries & Wages 51 Equipment Purchase 52 Income tax Installment 53 Total Disbursements 54 Cash Excess (Deficiency) 55 Financing (Note 1) 56 Borrow Repayment of Principal (show as 57 negative) 58 Net Financing 59 Cash Balance, Ending 60 61 Note 1: Financing Calculations 62 Cash excess (Deficiency) 63 Minimum cash balance = A Case Intro Q1 Calculation Mode: Automatic Q2 Q3 Q4 Q5 06. some updates to the privacy settings to give you more control. Your organization's admin allows you to use seve optional cloud-backed services are provided to you under the Microsoft Services Agreement Learn more A1 fx Question 5 - Cash Budget (30 marks) 52 53 B D E F 56 Income tax Installment Total Disbursements 54 Cash Excess (Deficiency) 55 Financing (Note 1) Borrow Repayment of Principal (show as 57 negative) 58 Net Financing 59 Cash Balance, Ending 60 61 Note 1: Financing Calculations 62 Cash excess (Deficiency) 63 Minimum cash balance 64 Amount to borrow (repay) Borrowing (Repayments) Rounded to 65 increment of $1,000 66 67 68 69 70 71 Question 5 - Cash Budget (30 marks) Mountain Sports has aquired an open line of credit up to a maximum of $350,000. It will be necessary to convince the bank manager of this new Canmore branch ability to repay its line of credit including any interest. Management has provided the following list of assumptions to help in the preparation of the cash budget (note: you will need to use the projected income statement provided in Question 4 to complete the cash budget): 1. Beginning cash balance invested by owners $ 53,000 Quarter 1 Quarter 2 20% Quarter 3 Quarter 4 28% 24% 28% 2. Sales by quarter (as % of total projected sales) 5 3. Type of collections from customers: Cash Sales 3 Credit Sales (accounts receivable) 43% 57% 5 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 5 4. Merchandise purchases eement. Learn more A1 V fx Question 5 - Cash Budget (30 marks) F B D E 14 15 Cash sales are collected in the quarter of the sale, all credit sales are collected in the quarter after the sale. 16 17 4. Merchandise purchases 18 Merchandise purchases (cost of goods sold) are all paid in the quarter following purchase. (Quarter 1 purchases are 19 20 5. Operating expenses 21 All other operating expenses (all expenses except cost of goods sold) are paid on a monthly basis. 22 23 6. Required investment in equipment paid in cash in the first quarter $ 136,000 24 25 7. Quarterly income tax payments paid in cash $ 8,000 26 27 8. Minimum cash balance $ 24,000 28 29 9. Borrowing and Repayments: Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. 30 31 Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made as requested by the company's bank = Case Intro 01 02 Calculation Mode: Automatic Q3 Q4 Q5 Q6 + Workbook Statirti A D E Any borrowing will take place on the first day of the quarter and any repayments are paid at the end of the quarter. All borrowing and payments are made in increments of $1,000. Interest on borrowing can be ignored. F 30 31 Required: Prepare a cash budget for the first year of operation in Canmore by quarter and in total. Show clearly on your budget the quarter(s) in which borrowing will be needed and the quarter(s) in which repayments can be made, as requested by the company's bank. 32 Mountain Sports Cash Budget For the year ended December 31 33 34 35 36 37 Percent of Sales Estimated Sales 1 20% $105,200 Quarter 2 28% $147,280 3 24% $126,240 4 28% $147,280 Year Summary 100% $526,000 N 38 39 CASH BALANCE, Beginning 40 Collections from customers: 41 Cash Sales 42. Credit Sales To 53,000 Rei cas Can 4. 1 disb Case Intro 01 Calculation Mode: Automatic Q2 Q3 Q4 Q5 Q6 + Workbook Stot D B Cash Budget For the year ended December 31 E F 33 34 35 36 Percent of Sales 37 Estimated Sales 1 20% $105,200 Quarter 2 28% $147,280 3 24% $126,240 4 28% $147,280 Year Summary 100% $526,000 $ 53,000 38 39 CASH BALANCE, Beginning 40 Collections from customers: 41 Cash Sales 42 Credit Sales 43 CASH AVAILABLE 44 Less: Cash Payments 45 Merchandise purchases (COGS) 46 Sales Commissions 47 Advertising 48 Property Taxes 49 Rent 50 Salaries & Wages 51 Equipment Purchase 52 Income tax Installment 53 Total Disbursements you more control. Your organization's admin allows you to use several clo optional cloud-backed services are provided to you under the Microsoft Services Agreement. Learn more A1 fx Question 5 - Cash Budget (30 marks) B D E F 47 Cash Sales 42 Credit Sales 43 CASH AVAILABLE 44 Less: Cash Payments 45 Merchandise purchases (COGS) 46 Sales Commissions 47 Advertising 48 Property Taxes 49 Rent 50 Salaries & Wages 51 Equipment Purchase 52 Income tax Installment 53 Total Disbursements 54 Cash Excess (Deficiency) 55 Financing (Note 1) 56 Borrow Repayment of Principal (show as 57 negative) 58 Net Financing 59 Cash Balance, Ending 60 61 Note 1: Financing Calculations 62 Cash excess (Deficiency) 63 Minimum cash balance = A Case Intro Q1 Calculation Mode: Automatic Q2 Q3 Q4 Q5 06. some updates to the privacy settings to give you more control. Your organization's admin allows you to use seve optional cloud-backed services are provided to you under the Microsoft Services Agreement Learn more A1 fx Question 5 - Cash Budget (30 marks) 52 53 B D E F 56 Income tax Installment Total Disbursements 54 Cash Excess (Deficiency) 55 Financing (Note 1) Borrow Repayment of Principal (show as 57 negative) 58 Net Financing 59 Cash Balance, Ending 60 61 Note 1: Financing Calculations 62 Cash excess (Deficiency) 63 Minimum cash balance 64 Amount to borrow (repay) Borrowing (Repayments) Rounded to 65 increment of $1,000 66 67 68 69 70 71