Term Assignment #20 2 Saved Garden Sales, Inc. sells garden supplies. Management is planning its cash needs for the second quarter. The following Information has been assembled to assist in preparing a cash budget for the quarter. a. Budgeted monthly Income statements for April to July are as follows: 30 Sales points Cost of goods sold April $490,000 342,000 Gross margin 148,000 May June $730,000 $410,000 510,000 287,000 220,000 123,000 July $330,000 231,000 99,000 Less: Operating expenses: Selling expense 65,200 98,000 50,600 41,800 Administrative expense 37,000 Total operating expenses 102,200 41,900 139,900 33,800 84,400 31,400 73,200 Net income $ 45,800 $ 80,100 $ 38,600 $ 25,800 "Includes $20,000 in depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period in the following ratio: 10% collected in the month of sale, 70% collected in the first month following the month of sale, and the remaining 20% collected in the second month following the month of sale. February's sales totalled $170,000, and March's sales totalled $250,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's Inventory purchases are paid for in the month of purchase. The remaining 50% are paid in the following month. Accounts payable at March 31 for Inventory purchases during March total $102.000. e. At the end of each month, Inventory must be on hand equal to 20% of the cost of the merchandise to be sold in the following month. The merchandise Inventory at March 31 is $68,400 f. Dividends of $39,900 will be declared and paid in April. g Equipment costing $13,300 will be purchased for cash in May. The cash balance at March 31 is $42,600; the company must maintain a cash balance of at least $30,000 at all times. The company can borrow from its bank, as needed, to bolster the cash account. Borrowings and repayments must be in multiples of $500 Interest is due only when principal is repaid and is calculated on the amount of repayment for the duration of the time money was borrowed. All borrowings take place at the beginning of a month, and all repayments are made at the end of a month. The annual Interest rate is 12%. Compute Interest on whole months (1/12, 212, and so forth). Required: 1. Pronare tek 2 Required: 1. Prepare a schedule of expected cash collections from sales for each of the months April, May, and June, and for the quarter In total. ints Cash sales Sales on account: February March April May June Total cash collections GARDEN SALES INC. Shechule of Expected Cash Collections April MAY June Quarter $ 98,000 $ 146,000 $82,000 $ 66,000 27.200 27,200 140,000 39,200 40,000 180,000 274,400 78,400 392,000 58,400 408,800 467,200 32,800 32,800 $ 304,400 $ 518,800 $ 602,000 $1,165,200 2. Prepare the following for merchandise Inventory. a. An Inventory purchases budget for each of the months April, May, and June. Actual cost of goods sold Add Desired ending inventory Total needs Deduct Beginning inventory GARDEN SALES, INC. Inventory Purchases Budget April May June 102,000 444.000 $ 342.000 $ 510,000 $ 231,000 46,200 277 200 57.400 587,400 88,400 102,000 57,400 Required inventory production 5 375.000 $ 485,400 S 219,800 arm Assignmont #2 Sam b. A schedule of expected cash disbursements for Inventory for each of the months April, May, and June, and for the quarter in total. 2 SARDEN SALES, THC Schedule of Expected Cash Disbursements for Inventory April May June Accounts payable, March 31 $ 102,000 Quarter $ 102,000 April purchases 187,800 187,800 375,000 May purchases 232,700 June purchases 232,700 109.900 465,400 109,900 Total cash disbursements $ 289,800 $ 420,500 $ 342,000 $1,052,900 3. Prepare a cash budget for the third quarter, by month as well as in total for the quarter. Show borrowings from the company's bank and repayments to the bank, as needed, to maintain the minimum cash balance. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) GARDEN SALES, INC. Cash Budget For the Quarter Ended June 30 Cash balance, beginning April $ 42.800 May June Add Collections from sales 304,400 518.800 Total cash available 347,000 518.800 602.000 602.000 Quarter $ 42,000 1.185.200 1,207,800 Deduct Disbursements Purchases for inventory 289,800 420.500 342 600 1,052,900 Selling expenses 65,200 98,000 Administrative expenses 17.000 21,900 50,600 13,800 213.800 52.700 Dividends paid 30.900 39,900 Equipment purchases 13.300 13,300 Total disbursements 411,900 553,700 407.000 1.372.600 otrits 3. Prepare a cash budget for the third quarter, by month as well as in total for the quarter. Show borrowings from the company's bank and repayments to the bank, as needed, to maintain the minimum cash balance. (Roundup "Borrowing" and "Repayments" answers to the nearest whole dollar amount. Any "Repayments" and "Interest" should be indicated by a minus sign.) GARDEN SALES, INC. Cash Blodget For the Quarter Endet June 30 April Maay June Quarter Cash balance, beginning $ 42,600 Add: Collections from sales 304,400 518.800 602,000 Total cash available 347,000 518,800 $ 42,600 1,165,200 602,000 1,207,800 Deduct Disbursements Purchases for inventory 289,800 420,500 342,600 1,052,900 Seling expenses 65,200 98,000 50,600 213,800 Administrative expenses 17,000 21,900 13,800 52,700 Dividends paid 39,900 39,900 Equipment purchases 13,300 13,300 Total disbursements 411,900 553,700 407,000 1,372,600 Excess (deficiency) of cash (84,900) (34,900) 195,000 (207,400) Financing Borrowings Repayments Interest Total financing O Cash balance, ending < Prey 2 of 5 Next >