The beauty behind excel is that managers can perform what-if analysis just by changing the data, so you do not need to retype the budgets if you have used cell references and formulas throughout.

Data Scenario:You have just been hired into a management position which requires the application of your budgeting skills.You find out that budgeting has not been a priority of the company and that they have been experiencing cash shortages.You have contacted various areas on the organization and have accumulated the information below to assist you in preparing a comprehensive budget.

The following is actual information that relates to the operations of a merchandiser named Sled Company, a wholesaler of sleds as of March 31.Cash $1,000 Accounts receivable 13,680 Inventory 10,757 Accounts Payable $15,781

Actual and Budgeted sales dollar Data-Sales Budget:March (actual) $38,000 April $36,000 May $37,000 June $39,000 July $35,000

Sales are the following type:64% Cash sales collected in month of sale 36% Credit sales collected in the following month of saleCredit sales are collected in the month following sale.The accounts receivable at March 31 are a result of March credit sales.Cost of goods sold equals 83%of sales price

At the end of each month, inventory is to be on hand(ending inventory) equal to 36% of following month's sales needs, stated at cost.Inventory purchases are paid 49% in month of purchase 51% in month after purchase.The accounts payable at March 31 is a result of March purchases of inventory.I have set up a calculation on the budget worksheet to show you this calculation.

Monthly selling expenses are as follows and are paid in the month incurred if it is a cash expense.Salaries and wages 8% of sales dollar Commissions 3% of sales dollar Advertising $900 per month Utilities $200 per month

Monthly general and administrative expenses are as follows and are paid in the month incurred if it is a cash expense. Rent $2,000 per month Depreciation $500 for month

Required:You must use cell references on the BudgetSolution worksheet, by referencing this worksheet that contains the data.Prepare the following second quarter budgets and answer the questions listed on the template provided on the BudgetSolution Worksheet.I have adapted the budget model to meet the needs of this company.If I bolded a line item, that is a header and does not need computation on that row.Please note the quarter column is for the quarter so not all lines should be added across in the quarter column.When you have beginning and ending inventory or cash balances this is for the quarter and should be brought over to the quarter column.

1. Prepare Sales Budget in dollars by month and quarter.

2.Prepare a merchandise purchase budget by month and quarter in dollars.

3.Prepare a SellingExpense Budget, by month and quarter.

4.Prepare a General and Administrative budget, by month and quarter.

5.Prepare a cash budget showing the months and quarter.

6.Based on the quarterly cash budget you prepared, do you have any recommendations on cash management. Discuss the type of business and the cash flow problems a company in this industry might have.Type your answer on the budget worksheet , where I have set out the question.

7.Prepare a budgeted income statement for the quarter ending June 30, 20XX. You do not need to show monthly columns. I entered Sales for you on the income statement

8.What do you think about the survivability of this business?

9.What if the company finds out the monthly rent will increase to $2,500, what budgets are effected? Why?What is the New Net income(Loss) for the quarter?

If you have linked everything correctly, you should only have to change the monthly rent on this sheet to determine your answer to the questions asked.Please change the rent back to the original amount of 2,000 before you submit.

#1

Sled Company

Sales Budget for the quarter ending June 30, 20XX

April

May

June

Quarter

Sales

$23,040

$23,680

$24,960

$71,680

#2

Sled Company

Purchase budget

For the quarter ended June 30, 20XX

April

May

June

Quarter

Budgeted Sales

Current Cost of goods sold

Desired Ending inventory

Total needs

Less: Beginning Inventory

Total purchase cost

#3

Sled Company

Selling Expense Budget

For the quarter ended June 30,20XX

April

May

June

Quarter

Budgeted Sales

Variable selling expenses:

Salaries and wages

Commissions

Total variable cash expenses

Fixed Selling expenses:

Advertising

Utilities

Total fixed expenses

Total selling expenses

#4

Sled Company

General and Administrative Expense Budget

For the quarter ended June 30,20XX

April

May

June

Quarter

General and Administrative Expenses:

Rent

Depreciation

Total general and administrative expenses

#5

Sled Company

Cash Budget

For the quarter ended June 30, 20XX

April

May

June

Quarter

Beginning cash

Add Cash Collections of Sales:

Cash sales collected in month sale

Credit sales Collected in following month

Total Cash receipts from collection of sales

Cash Available for operations

Less Cash Disbursements:

Cash payments for purchases paid in month

Cash payments made in month after purchase

Total Cash payments for merchandise purchased

Cash Variable Selling Expenses

Cash General and administrative expenses

Total cash Disbursements

Ending cash

6.Based on the quarterly cash budget you prepared, do you have any recommendations

on cash management. Discuss the type of business and the cash flow problems a company in this industry might have.

#7

Sled Company

Budgeted Income Statement

For the quarter ended June30, 20XX

Sales

112,000

Cost of goods sold

Gross profit

Other Expenses

Selling Expenses

General and administrative expenses

Income(Loss) from operations

8.What do you think about the survivability of this business?

9.What if the company finds out the monthly rent will increase to $2,500, what budgets are effected? Why?

What is the New Operating income(Loss) for the quarter?

If you have linked everything correctly, you should only have to change the monthly rent

on this sheet to determine your answer to the questions asked.Please change the rent back to the original amount of 2,000 before you submit.