TAB 1/DATA

1. Insert all the data given below. This is the only TAB which can have hard coded entries. The balance sheet from the last accounting period is given.

TAB 2/BUDGET

Prepare a master budget for the three-month period ending June 30, 2012. You MUST use formulas in all cells, not constant numbers. That means all cells in your budget must be linked to the data from TAB 1 or completed data from TAB 2. A template has been provided. Include the following detailed budgets:

1. a. A sales budget by month and in total.

b. A schedule of expected cash collections from sales, by month and in total.

c. A merchandise purchases budget in units and in dollars. Show the budget by and in total.

d. A schedule of expected cash disbursements for merchandise purchases, by month and in total.

2. A cash budget. Show the budget by month and in total.

TAB 3/INCOME STATEMENT

1. A budgeted income statement for the three month period ending June 30. Use the contribution approach. You MUST use formulas in all cells, not constant numbers. A partial template has been provided.

TAB 4/BALANCE SHEET

1. A budgeted balance sheet as of June 30. You MUST use formulas in all cells, not constant numbers. A template has been provided.

DATA:

The company desires a minimum ending cash balance each month of $10,000.

The ties are sold to retailers for $10.00 each. Recent and forecasted sales in units are as follows:

January (actual) 25,000 June 60,000

February (actual) 30,000 July 35,000

March (actual) 32,000 August 40,000

April 40,000 September 32,000

May 50,000

The large buildup in sales before and during June is due to Fathers Day. Ending inventories are supposed to equal 80% of the next months sales in units. The ties cost the company $6 each.

Purchases are paid as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, however, that only 25% of a months sales are collected by month-end. An additional 50% is collected in the following month, and the remaining 25% is collected in the second month following sale. Bad debts have been negligible.

The companys monthly selling and administrative expenses are as follows:

Variable:

Sales commissions $1.50 per tie

Fixed:

Wages and salaries $22,000

Utilities 14,000

Insurance 1,200

Depreciation 1,500

Miscellaneous 3,000

All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $20,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter.

The company has an agreement with a bank that allows it to borrow in increments if $1,000 at the beginning of each month, up to a total loan balance of$100,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1,000), while still retaining at least $10,000 in cash.

Excel template Q Search Sheet Home Insert Page Layout Formulas DataReviewView Conditional Formatting Formatting . 1 MS Sans Serif 10 A A General Font / Format as Table as $ % , 4,0 ,00 Paste Editing Cell Styles Minimum cash balance each month: 0 Newport Tie Company Balance Sheet March/31/2011 7 Cash 8 Accounts Receivable (75,000 February Sales 9 and $240,000 March Sales) 10 Merchandise Inventory 11 Prepaid Insurance 12 Fixed Assets Net of Depreciation 13 Total Assets 14,000 315,000 192,000 708,100 Liabilities and Stockholders' Equity 15 6 Liabilities 17 Accounts Payable 18 Dividends Payable 19 Total Liabilities 115,200 127 21 Stockholders' Equity 22 Common stock 23 Retained Eamings 24 Total Stockholders'Equity 25 Total Liabilities and Stockholders' Equity 26 580,900 708,100 28 29 Salcs 30 January (actual) 31 February (actual) 32 March (actual) 33 April Units Total 25,000$250,000 30,000 5300,000 32,0005320,000 40,000 $400,000 Data(1) get(2) IS (3) BS(4) Ready + 100%