The Chippewa Chocolates (CC) Company began business on January 1^st, 2020. After its first year of operation, CCs president, Allen Hale, is now trying to prepare the companys master budget for the first two months (January and February) of 2021. Since you are his good friend and an accounting student, Mr. Hale has asked you to prepare the budget.

Based on the budgets from 2020, Mr. Hale has gathered the following information:

• Projected Sales for January 2021 $126,800
• Average Monthly Sales Increase 4%
• Average Monthly Salary Expenses $ 34,200
• Average Monthly Rent Expenses $ 5,600
• Average Monthly Utility Expenses $ 6,520
• Average Monthly Misc. Expense $ 2,700
• Supplies Expense-percent of sales 3%
• Commission-percent of sales 5%

Begin your project by carefully reading all instructions given here and reviewing the balance sheets and budget worksheets contained in the Excel workbook.

Fill in the data table in the upper left hand corner of the Budgets worksheet (found on the second tab in the Excel workbook) with the values above and other values found in the assumptions given below. Using this information, prepare Chippewa Chocolates master budget for the first two months of 2021. All amounts should be rounded to whole dollars as necessary. Apply the following assumptions:

1. Customers typically pay 54% of total sales in cash and put the remaining 46% on account. The company expects to collect 100% of the credit sales in the month following the sale.

2. The cost of goods sold is 34% of budgeted sales and the company desires to maintain a minimum ending inventory equal to 30% of the next months cost of goods sold. All purchases are made on account.

3. The company pays 75% of inventory purchases in the month of purchase and the remaining 25% in the following month.

4. Depreciation expense on existing equipment is $2,300 each month. In addition, CC will spend $250,000 on January 1 for additional equipment. The equipment is expected to have a $10,000 salvage value and a ten-year (120-month) useful life.

5. Salaries, utilities, and sales commissions are paid the month after they are incurred; all other expenses are paid in the month in which they are incurred.

6. The company borrows and repays funds on its credit line in increments of $1,000 on the last day of each month as necessary to maintain its targeted $43,000 cash balance. It pays interest of .4% per month in cash on the last day of the month on cash borrowed in the prior month.

The six master budget documents should refer to the values in the data table the first time an item is used and to other budgets thereafter. Please make sure that all original underlines and borders are kept in place. Do not add/delete rows or columns. In addition, any blanks in the budget description columns must be filled in. For example, in the Inventory Purchases Budget, under Cost of Goods Sold, it says Add: . You need to say what youre adding there.

Under no circumstances should your budgets or February Balance Sheet contain just numbers, only formulas, in the format view. NOTE: The cells in the December Balance Sheet and the Borrow/Repayment cells in the Cash Budget are protected and, therefore, cannot be changed. You are, however, able to reference these cells in your formulas.

Use the templates in the Excel workbook to prepare all Budgets and the February Balance Sheet as outlined in the spreadsheet.

Project submission instructions:

Each individual/group will submit one (1) project file for grading through the link in Bb>Projects & Exams>Budget Project (see the instructions given there). All projects are due by 11:59pm on Tuesday, 3/30. No late submissions will be accepted for any reason.

When naming your file, include the last name of each group member (i.e. Smith_Jones)

Grading:

The project is worth a total of 50 points. It will be graded on the accuracy of the dollar values, whether or not the Balance Sheet balances, correct cell references between budgets, completion of titles, and completion of formulas. I will be changing all the values in the data section of the Budget page. Therefore, you need to make sure all formulas are set up so those changes will automatically be reflected throughout the budgets. Between .1 and .5 points will be deducted from the score for each error and/or occurrence.

Sharing of files between groups is considered cheating and will result in the loss of all project points for all students involved, and the School of Accounting Chairperson and/or the Office of Student Affairs will be notified.