The information given below is the Cavaliers Company's beginning balance sheet, estimates and policies, and the partially completed Master Budget for July and August. Use the information to answer the 22 Multiple Choice Questions, each asking for a missing number from the Master Budget. ASSETS Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets Cavaliers Company Balance Sheet As of June 30, 2020 LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities S 5.000 Accounts Payable $ 11,000 15.000 Commissions Payable 1,300 Income Taxes Payable 3.500 1,600 Dividends Payable 21,600 Total Current Liabilities 15,800 70,000 Property Plant & Equipment Lund I quipment Accumulated Depreciation Net PP & E 60.400 85.000 22.000) 123,400 Long-term debt Stockholders' Equity Common Stock Retained Tamnings Total Stockholders' Equity 49.200 10.000 59.200 Total Assets $ 145,000 Total l.labilities & SE $ 145,000 1. Expected sales are $49,000, S60,000, and $75,000, respectively in July, August, and September. All sales are on credit. The company collects 75% of sales in the month of the sale and 25% in the month after the sale. 2. The cost of goods sold is equal to 55% of sales. 3. The company desires an ending inventory equal to 20% of the next month's cost of goods sold. 4. All purchases of inventory are on credit. The company pays for 80% of its purchases in the month of the purchase and 20% in the month after the purchase. 5. The company pays a 3% sales commission to its sales staff that is paid in the month after it is earned. 6. The company also incurs a utilities expense that is equal to $300 plus 1% of sales. This expense is paid in the month it is incurred. 7. Other Selling and Administrative Expenses, paid in the month they are incurred, include Advertising S1.100 per month, Salaries $1.400 per month and Depreciation S900 per month 8. On July 1 the company purchased an insurance policy covering 24 months for $12.000. 9. The company pays interest on its long-term debt at the end of each month. Interest is equal to 1% of the balance of long-term debt at the beginning of the month, 10. On August 10 the company will pay cash for Land, costing $6,500. 11. On July 27 the company will declare a cash dividend of 55.000 and will pay it in August 12. The company requires a minimum cash balance of $5,000 and will use any cash surplus to pay down long-term debt. The company borrows cash in S1.000 increments. Cavaliers Company Sales Budget S&A Expenses Budget July August September July August Credit Sales $ 49,000 $ 60,000 $ 75,000 (4) Variable Selling & Admin Exponses Sales Commissions Utilities Total Variable S&A Expenses 1,960 2,400 Cash Receipts: From Current Month Sales From Prior Month Sales Total Cash Receipt (1) $ 57,250 1,100 1,100 Fixed Selling & Admin Expenses Utilities Advertising Salaries Depreciation Insurance Total Fixed S&A Expenses 1,400 Inventory Purchases Budget 1,400 900 900 July August September (5) 4,200 4,200 $ 33,000 $ 41,250 Cash Payments for S&A Expenses COGS Desired Ending Inventory Total Inventory Needed Beginning inventory Inventory Purchases Sales Commissions Utilities Advertising 790 900 (2) $ 34,650 1,100 1.100 $ 33,000 5 41,200 COGS Desired Ending Inventory Total Inventory Needed Beginning Inventory Inventory Purchases 790 900 1,100 (2) $ 34,650 Cash Payments for S&A Expenses Sales Commissions Utilities Advertising Salaries Depreciation Insurance Total Payments for S&A Expenses 1,100 1,400 1,400 (6) Cash Payments for Purchases For Current Month Purchases For Prior Month Purchases Total Cash Payments (7) 4.870 $ 16,690 $ $ 25,560 11.000 $36,560 (3) Income Statement Cash Budget July August July August $ 49,000 $ 60,000 Beginning Balance Cash Receipts Total Cash Available 57,250 56.750 Sales Less: Variable costs COGS Variable S&A Expenses Contribution Margin Less: Fixed Costs Fixed SEA Expenses (11) Cash Payments For Inventory Purchases For SSA Expenses 36 560 For Internet 18 Interest Expense Income Statement Cash Budget July August July August $ 49,000 $ 60,000 57,250 Beginning Balance Cash Receipts Total Cash Available 56.750 (11) 36,560 Cash Payments: For Inventory Purchases For S&A Expenses For interest For Stock Investment For Land For Dividends For Taxes Total cash payments Sales Less: Variable costs COGS Variable S&A Expenses Contribution Margin Less: Fixed Costs Fixed S&A Expenses Interest Expense Pre-tax income Less: Income Taxes Net Income $ 15,190 $ 19,640 3,798 4,910 $ 11,393 $ 14,730 57,350 7,613 Surplus (Deficit) New Borrowing / (Repayment) Ending Cash Balance 19) 6,000 (10) 5,000 $ 2 Balance Sheet July August July August ASSETS $ (18) (12) (13) LIABILITIES & STOCKHOLDERS EQUITY Current Liabilities Accounts Payable Commissions Payable Income Taxes Payable Dividends Payable Total Current Liabilities Current Assets Cash Accounts Receivable Prepaid Insurance Inventory Total Current Assets 6,390 (19) 12,250 (14) (15) (20) Long term debt (21) Property Plant & Equipment Stock Investment Land Equipment Accumulated Depreciation Total PP SE (16) 85,000 49,200 85.000 (171 Stockholders' Equity Common Stock Retained Earnings Total Stockholders Equity 49,200 (22) TOTAL ASSETS $ 158,250 $ 167,350 TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 158.250 5 167.350 O $7.000 9. What is Total Cash Surplus (Deficit for July? 1 ok 0 $ 600 O $7,613 O $5,400 $(7,100) O $(600) ) EES 10. What Is Total Net Borrowing (Repayment) for August? $0 $ 2,613 $(7.613) $ 6,000 $ (2,613) 11. What is the contribution Margin for August $14.730 $60.000 $24.600 $57,600 $20.090 12. What is the balance of Cash on August 31, 2020? $ 5,400 $ 5,900 $0 $ 5,000 $76,000