Required information (The following information applies to the questions displayed below We really need to get this new material handling equipment in operation just after the new year begins I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short term loan down at MetroBank This statement by Beth Davies Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management Intercoastal is a small, rapidly growing wholesaler of consumer electronic products The firm's main product lines are small kitchen appliances and power tools, Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales Then Wilcox expects sales to remain constant for several months Intercoastal's projected balance sheet as of December 31, 20x0, is as follows Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of accumulated depreciation) Total assets Accounts payable Bond interest payable Property taxes payable Bonds payable (104 due in 20x6) Common stock Retained earnings Total liabilities and stockholders' equity $ 55,000 360,000 25 000 192,500 546,000 $1,178,500 $ 220,500 6,250 3,600 150,000 500,000 298,150 $1,178,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1 In the process, the following information has been accumulated 1 Projected sales for December of 20x0 are $500,000 Credit sales typically are 80 percent of total sales Intercoastal credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month 2 Intercoastal's cost of goods sold generally runs at 70 percent of sales Inventory is purchased on account, and 40 percent of each month's purchases are paid during the month of purchase The remainder is paid during the following month In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold 3 Hanson has estimated that intercoastal's other monthly expenses will be as follows Sales salaries Advertising and promotion Administrative salaries Depreciation Interest on bonds Property taxes $ 30 000 16,000 30,000 30 000 1 250 900 In addition, sales commissions run at the rate of 2 percent of sales 4 Intercoastal's president, Davies Lowry, has indicated that the firm should invest $115,000 in an automated Inventory handling system to control the movement of inventory in the firm's warehouse just after the new year begins These equipment purchases will be financed primarily from the firm's cash and marketable securities However, Davies Lowry believes that intercoastal needs to keep a minimum cash balance of $50,000 If necessary, the remainder of the equipment purchases will be financed using short term credit from a local bank The minimum period for such a loan is three months Hanson believes short term interest rates will be 10 percent per year at the time of the equipment purchases If a loan is necessary Davies Lowry has decided it should be paid off by the end of the first quarter possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50 000 on the last day of each quarter 6 The interest on any short term borrowing will be paid when the loan is repald Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month penod Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20xt by completing the following schedules and statements In addition, sales commissions run at the rate of 2 percent of sales 4 Intercoastal's president, Davies Lowry, has indicated that the firm should invest $115,000 in an automated Inventory handling system to control the movement of inventory in the firm's warehouse just after the new year begins These equipment purchases will be financed primarily from the firm's cash and marketable securities However, Davies Lowry believes that Intercoastal needs to keep a minimum cash balance of $50,000 If necessary, the remainder of the equipment purchases will be financed using short term credit from a local bank The minimum period for such a loan is three months Hanson believes short term interest rates will be 10 percent per year at the time of the equipment purchases If a loan is necessary Davies Lowry has decided it should be paid off by the end of the first quarter possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20xl by completing the following schedules and statements 1 Sales budget 20x0 December January February March First Quarter Total sales Cash sales Sales on account du m inyum ule nim's cash and marketable securities Howeve believes that Intercoastal needs to keep a minimum cash balance of $50,000 If necessary, the remaing equipment purchases will be financed using short term credit from a local bank The minimum period fc three months Hanson believes short term interest rates will be 10 percent per year at the time of the ed purchases If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the fa schedules and statements 2 Cash receipts budget January 20x1 February MarchFirst Quarter Cash sales Cash collections from credit sales made during current month Cash collections from credit sales made during preceding month Total cash receipts HUI UNCE M UIS Marison Belleves short term interest rates will be 10 percent per year at the time of the eau purchases If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first qu possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period, 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period, Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the fo schedules and statements 3 Purchases budget 20x0 December Vanuary February First Quarter Budgeted cost of goods sold Add Desired ending inventory Total goods needed Less Expected beginning inventory Purchases CALI quor 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's bonds is pa semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements 4 Cash disbursements budget 20x1 February March First Quarter Inventory purchases Cash payments for purchases during the current month Cash payments for purchases during the preceding month Total cash payments for inventory purchases Other expenses Sales salaries Advertising and promotion Administrative salaries Interest on bonds Property taxes Sales commissions Total cash payments for other expenses Total cash disbursements I terest Ull any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements 5 Complete the first three lines of the summary cash budget Then do the analysis of short term financing needs in requirement (6) Then finish requirement (5) 20x1 January February March First Quarter Cash receipts (from part 2) Less Cash disbursements (from part 4) Change in cash balance during period due to operations Sale of marketable securities (1 2 X1) Proceeds from bank loan (1 2 x1) Purchase of equipment Repayment of bank loan (3 31 x1) Interest on bank loan Payment of dividends Change in cash balance during first quarter Cash balance, 1 1 x 1 Cash balance, 3 31 x1 July, we remainde my short term credit from a local bank The minimum period for uiree months Hanson believes short term interest rates will be 10 percent per year at the time of the ed purchases If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period, 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the schedules and statements 6 Calculation of required short term borrowing Projected cash balance as of December 31, 20x0 Less Minimum cash balance Cash available for equipment purchases Projected proceeds from sale of marketable securities Cash available Less Cost of investment in equipment Required short term borrowing 1 Property taxes are para semiannually on reoruary 20 and August 31 for the preceding six monun penoa Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements 7 Prepare Intercoastal Electronics' budgeted income statement for the first quarter of 20x1 Ignore income taxes ) INTERCOASTAL ELECTRONICS COMPANY Budgeted Income Statement For the First Quarter of 20x1 Selling and administrative expenses Total selling and administrative expenses I UJIT CUI 350,000 i necessary, the remainder of equipment purchases will be financed using short term credit from a local bank The minimum period for su three months Hanson believes short term interest rates will be 10 percent per year at the time of the equip purchases If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first qual possible 5 Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the each quarter 6 The interest on any short term borrowing will be paid when the loan is repaid Interest on Intercoastal's bor semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the foll schedules and statements 8 Prepare Intercoastal Electronics' budgeted statement of retained earnings for the first quarter of 20x1 INTERCOASTAL ELECTRONICS COMPANY Budgeted Statement of Retained Earnings For the First Quarter of 20x1 Retained earnings, 12 31 x0 Retained earnings, 3 31 1 I borrowing will be paid when the loan is repaid Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period 7 Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period, Required Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x by completing the following schedules and statements 9 Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1 (Hint On March 31, 20x1, Bond Interest Payable is $2,500 and Property Taxes Payable is $900 ) INTERCOASTAL ELECTRONICS COMPANY Budgeted Balance Shee March 31, 20x1 Total assets Total liabilities and stockholders' equity

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Required information (The following information applies to the questions displayed below    We really need to get this new material handling equipment in operation just after the new year begins  I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short term loan down at MetroBank This statement by Beth Davies Lowry, president of Intercoastal Electronics Company, concluded a meeting she had called with the firm's top management  Intercoastal is a small, rapidly growing wholesaler of consumer electronic products  The firm's main product lines are small kitchen appliances and power tools, Marcia Wilcox, Intercoastal's General Manager of Marketing, has recently completed a sales forecast  She believes the company's sales during the first quarter of 20x1 will increase by 10 percent each month over the previous month's sales  Then Wilcox expects sales to remain constant for several months  Intercoastal's projected balance sheet as of December 31, 20x0, is as follows  Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of accumulated depreciation) Total assets Accounts payable Bond interest payable Property taxes payable Bonds payable (104  due in 20x6) Common stock Retained earnings Total liabilities and stockholders' equity $ 55,000 360,000 25 000 192,500 546,000 $1,178,500 $ 220,500 6,250 3,600 150,000 500,000 298,150 $1,178,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1  In the process, the following information has been accumulated  1  Projected sales for December of 20x0 are $500,000  Credit sales typically are 80 percent of total sales  Intercoastal credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month  2  Intercoastal's cost of goods sold generally runs at 70 percent of sales  Inventory is purchased on account, and 40 percent of each month's purchases are paid during the month of purchase  The remainder is paid during the following month  In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next month's projected cost of goods sold  3  Hanson has estimated that intercoastal's other monthly expenses will be as follows  Sales salaries Advertising and promotion Administrative salaries Depreciation Interest on bonds Property taxes $ 30 000 16,000 30,000 30 000 1 250 900 In addition, sales commissions run at the rate of 2 percent of sales  4  Intercoastal's president, Davies Lowry, has indicated that the firm should invest $115,000 in an automated Inventory handling system to control the movement of inventory in the firm's warehouse just after the new year begins  These equipment purchases will be financed primarily from the firm's cash and marketable securities  However, Davies Lowry believes that intercoastal needs to keep a minimum cash balance of $50,000  If necessary, the remainder of the equipment purchases will be financed using short term credit from a local bank  The minimum period for such a loan is three months  Hanson believes short term interest rates will be 10 percent per year at the time of the equipment purchases  If a loan is necessary  Davies Lowry has decided it should be paid off by the end of the first quarter possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50 000 on the last day of each quarter  6  The interest on any short term borrowing will be paid when the loan is repald  Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month penod Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20xt by completing the following schedules and statements  In addition, sales commissions run at the rate of 2 percent of sales  4  Intercoastal's president, Davies Lowry, has indicated that the firm should invest $115,000 in an automated Inventory handling system to control the movement of inventory in the firm's warehouse just after the new year begins  These equipment purchases will be financed primarily from the firm's cash and marketable securities  However, Davies Lowry believes that Intercoastal needs to keep a minimum cash balance of $50,000  If necessary, the remainder of the equipment purchases will be financed using short term credit from a local bank  The minimum period for such a loan is three months  Hanson believes short term interest rates will be 10 percent per year at the time of the equipment purchases  If a loan is necessary  Davies Lowry has decided it should be paid off by the end of the first quarter possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the last day of each quarter  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20xl by completing the following schedules and statements  1  Sales budget  20x0 December January February March First Quarter Total sales Cash sales Sales on account du m inyum ule nim's cash and marketable securities  Howeve believes that Intercoastal needs to keep a minimum cash balance of $50,000  If necessary, the remaing equipment purchases will be financed using short term credit from a local bank  The minimum period fc three months  Hanson believes short term interest rates will be 10 percent per year at the time of the ed purchases  If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period  Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the fa schedules and statements  2  Cash receipts budget  January 20x1 February MarchFirst Quarter Cash sales Cash collections from credit sales made during current month Cash collections from credit sales made during preceding month Total cash receipts HUI UNCE M UIS  Marison Belleves short term interest rates will be 10 percent per year at the time of the eau purchases  If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first qu possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period, 7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period, Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the fo schedules and statements  3  Purchases budget  20x0 December Vanuary February First Quarter Budgeted cost of goods sold Add  Desired ending inventory Total goods needed Less  Expected beginning inventory Purchases CALI quor  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's bonds is pa semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements  4  Cash disbursements budget  20x1 February March First Quarter Inventory purchases  Cash payments for purchases during the current month Cash payments for purchases during the preceding month Total cash payments for inventory purchases Other expenses  Sales salaries Advertising and promotion Administrative salaries Interest on bonds Property taxes Sales commissions Total cash payments for other expenses Total cash disbursements I terest Ull any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period  Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements  5  Complete the first three lines of the summary cash budget  Then do the analysis of short term financing needs in requirement (6) Then finish requirement (5)  20x1 January February March First Quarter Cash receipts (from part 2) Less  Cash disbursements (from part 4) Change in cash balance during period due to operations Sale of marketable securities (1 2 X1) Proceeds from bank loan (1 2 x1) Purchase of equipment Repayment of bank loan (3 31 x1) Interest on bank loan Payment of dividends Change in cash balance during first quarter Cash balance, 1 1 x 1 Cash balance, 3 31 x1 July, we remainde my short term credit from a local bank  The minimum period for uiree months  Hanson believes short term interest rates will be 10 percent per year at the time of the ed purchases  If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on each quarter  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's semiannually on January 31 and July 31 for the preceding six month period, 7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the schedules and statements  6  Calculation of required short term borrowing  Projected cash balance as of December 31, 20x0 Less  Minimum cash balance Cash available for equipment purchases Projected proceeds from sale of marketable securities Cash available Less  Cost of investment in equipment Required short term borrowing 1  Property taxes are para semiannually on reoruary 20 and August 31 for the preceding six monun penoa Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the following schedules and statements  7  Prepare Intercoastal Electronics' budgeted income statement for the first quarter of 20x1  Ignore income taxes ) INTERCOASTAL ELECTRONICS COMPANY Budgeted Income Statement For the First Quarter of 20x1 Selling and administrative expenses  Total selling and administrative expenses I UJIT CUI 350,000  i necessary, the remainder of equipment purchases will be financed using short term credit from a local bank  The minimum period for su three months  Hanson believes short term interest rates will be 10 percent per year at the time of the equip purchases  If a loan is necessary, Davies Lowry has decided it should be paid off by the end of the first qual possible  5  Intercoastal's board of directors has indicated an intention to declare and pay dividends of $50,000 on the each quarter  6  The interest on any short term borrowing will be paid when the loan is repaid  Interest on Intercoastal's bor semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period  Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x1 by completing the foll  schedules and statements  8  Prepare Intercoastal Electronics' budgeted statement of retained earnings for the first quarter of 20x1  INTERCOASTAL ELECTRONICS COMPANY Budgeted Statement of Retained Earnings For the First Quarter of 20x1 Retained earnings, 12 31 x0 Retained earnings, 3 31 1 I borrowing will be paid when the loan is repaid  Interest on Intercoastal's bonds is paid semiannually on January 31 and July 31 for the preceding six month period  7  Property taxes are paid semiannually on February 28 and August 31 for the preceding six month period, Required  Prepare Intercoastal Electronics Company's master budget for the first quarter of 20x by completing the following schedules and statements  9  Prepare Intercoastal Electronics' budgeted balance sheet as of March 31, 20x1  (Hint On March 31, 20x1, Bond Interest Payable is $2,500 and Property Taxes Payable is $900 ) INTERCOASTAL ELECTRONICS COMPANY Budgeted Balance Shee March 31, 20x1 Total assets Total liabilities and stockholders' equity

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Required information (The following information applies to the questions displayed below.] We really need to get this new material handling equipment in operation just after

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