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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

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

  1. All Sales are on Credit. Sales are collected 24% in the month of sale and 76% in the month following sale.

  1. Cost of goods sold is budgeted to be 44% of sales.

  1. The Bobcat Beverage Company, Inc. plans to end each month with inventory levels equal to 8% of the next months cost of sales.

  1. The company pays for 78% of the purchases of merchandise in the month of the purchase and 22% in the following month.

  1. 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.

  1. 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.

  1. The company pays all of its advertising expense in the month AFTER it is incurred.

  1. 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.

  1. Depreciation is $10,000 per month on the property, plant and equipment owned on August 31, 2021 for the period of this budget.

  1. 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.

  1. On September 15, 2021, the company purchased Land for $130,000, paying cash.

  1. 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.

  1. 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.

  1. 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.

  1. 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

  1. Total Cash Receipts for September and October
  2. Total Inventory Purchases for September and October
  3. Total Cash Payments for Inventory Purchases for September and October
  4. Total Variable Selling & Administrative Costs for September and October
  5. Total Fixed Selling & Administrative Costs for September and October
  6. Total Cash Payments (S&A) for September and October
  7. Total Cash Surplus (Deficit) for September and October
  8. Total New Borrowing (Repayments) for September and October
  9. The Contribution Margin for September and October
  10. Total Interest Expense for September and October
  11. Pre-tax Income for September and October
  12. Income tax expense for September and October
  13. Ending Balance of Accounts Receivable for September and October
  14. Ending Balance of Inventory for September and October
  15. Ending Balance of Prepaid Insurance for September and October
  16. Ending Balance of Accumulated Depreciation for September and October
  17. Ending Balance of Accounts Payable for September and October
  18. Ending Balance of Commissions Payable for September and October
  19. Ending Balance of Long-Term Debt for September and October
  20. Ending Balance of Retained Earnings for September and October

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