Question
The Bobcat Beverage Company, Inc. sells a wide variety of beverages and snack foods. The Bobcat Beverage Co., Inc. Sales Forecast for Sept. to Nov.,
The Bobcat Beverage Company, Inc. sells a wide variety of beverages and snack foods.
The Bobcat Beverage Co., Inc. Sales Forecast for Sept. to Nov., 2021 | ||||
Sales Revenue (all Sales are on Credit) | September | October | November |
|
$800,000 | $900,000 | $980,000 |
|
Bobcat Beverage Company, Inc
Balance Sheet
As of August 31, 2021
Assets: |
| Liabilities: |
|
Cash | $ 25,800 | Accounts payable | $ 81,859 |
Accounts receivable | 595,000 | Sales commissions payable | 59,500 |
Inventory | 50,688 | Advertising Expense Payable | __ 121,250 |
Prepaid Insurance | 27,500 | Income taxes payable | __ 22,000 |
Current assets | $ 698,988 | Dividends payable | 0 |
|
| Current liabilities | $ 284,609 |
|
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|
|
|
|
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Property, Plant & Equipment |
| Long-term debt | 220,000 |
Land | 100,000 |
|
|
Plant & Equipment | 300,000 | Stockholders' equity |
|
Accumulated depreciation | (100,000) | Common stock | $ 89,500 |
|
| Retained earnings | 404,879 |
Total assets | $ 998,988 | Total SE & Liabilities | $ 998,988 |
Policies and Plans used by The Bobcat Beverage Company, Inc., in budgeting
- All Sales are on Credit. Sales are collected 24% in the month of sale and 76% in the month following sale.
- Cost of goods sold is budgeted to be 44% of sales.
- The Bobcat Beverage Company, Inc. plans to end each month with inventory levels equal to 8% of the next months cost of sales.
- The company pays for 78% of the purchases of merchandise in the month of the purchase and 22% in the following month.
- The Bobcat Beverage Company, Inc. pays a sales commission of 6.5% on all sales. The selling commission is paid in the month after the salesmen earn the commission.
- The company believes that advertising expense is a mixed cost. Based on an analysis of data from previous years, they determine that the best estimate of advertising expense is 17.5% of sales plus $60,000.
- The company pays all of its advertising expense in the month AFTER it is incurred.
- The Bobcat Beverage Company, Inc. estimates its general and administrative expenses to be equal to 15% of budgeted sales plus $60,000. The general and administrative expenses are paid in the month in which they are incurred.
- Depreciation is $10,000 per month on the property, plant and equipment owned on August 31, 2021 for the period of this budget.
- On July 31, 2021, the company purchased and paid cash of $30,000 for a twelve-month policy covering the period August 1, 2021 to July 31, 2022 and recorded the cost in Prepaid Insurance.
- On September 15, 2021, the company purchased Land for $130,000, paying cash.
- The Bobcat Beverage Company, Inc. records interest expense and accrues interest payable at the rate of 1% per month (simple interest) based on the beginning balance of Long-Term Debt for that month. The Bobcat Beverage Company, Inc. will pay interest in the month it is incurred.
- The Bobcat Beverage Company must maintain a minimum cash balance of $25,000. If it must borrow any funds, it must borrow in $1,000 increments. Any excess cash will be used to pay down long-term debt. The company may either borrow funds or repay funds, but not both in the same month.
- The Bobcat Beverage Company, Inc. records income tax expense and accrues income tax payable monthly using a 25% estimated tax rate. Income taxes are paid in the month AFTER they are incurred.
- The company will declare a cash dividend on September 20, 2021 for $25,000. The cash dividend will be paid on October 15, 2021. No other dividends were declared or paid.
Once you have completed the budget, determine the following balances
- Total Cash Receipts for September and October
- Total Inventory Purchases for September and October
- Total Cash Payments for Inventory Purchases for September and October
- Total Variable Selling & Administrative Costs for September and October
- Total Fixed Selling & Administrative Costs for September and October
- Total Cash Payments (S&A) for September and October
- Total Cash Surplus (Deficit) for September and October
- Total New Borrowing (Repayments) for September and October
- The Contribution Margin for September and October
- Total Interest Expense for September and October
- Pre-tax Income for September and October
- Income tax expense for September and October
- Ending Balance of Accounts Receivable for September and October
- Ending Balance of Inventory for September and October
- Ending Balance of Prepaid Insurance for September and October
- Ending Balance of Accumulated Depreciation for September and October
- Ending Balance of Accounts Payable for September and October
- Ending Balance of Commissions Payable for September and October
- Ending Balance of Long-Term Debt for September and October
- Ending Balance of Retained Earnings for September and October
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