The president of Univax, Inc., has just approached the company's bank seeking short-term financing for the coming year, Year 2. Univax is a distributor of commercial vacuum cleaners. The bank has stated that the loan request must be accompanied by a detailed cash budget that shows the quarters in which financing will be needed, as well as the amounts that will be needed and the quarters in which repayments can be made To provide this information for the bank, the president has directed that the following data be gathered from which a cash budget can be prepared: a. Budgeted sales and merchandise purchases for Year 2, as well as actual sales and purchases for the last quarter of Year 1, are as follows: Sales Year 1 Fourth quarter actual $270,000 $170,000 Year 2: First quarter estimated Second quarter estimated Third quarter estimated Fourth quarter estimated $370,000 $250,000 $470,000 $570,000 $360,000 $450,000 $300,000 $230,000 b. The company typically collects 48% of a quarter's sales before the quarter ends and another 50% in the c. Some 15% of d. Selling and e. The company will pay $12,000 in cash dividends each quarter following quarter. The remainder is uncollectible. This pattern of collections is now being experienced in the actual data for the Year 1 fourth quarter the following quarter the foxed amount, $17,000 each quarter is depreciation the third quarter a quarter's merchandise purchases are paid for within the quarter. The remainder is paid in adrnstrative expenses for Year 2 are budgeted at S87.000 per quarter plus 9% of sales, or f. Land purchase es will be made as follows during the year: $88,000 in the second quarter and $47,700 in Cash account contained $28,000 at the end of Year 1. The company must maintain a minimum cash balance of at least $26,000. company has an agreement with a local bank that allows the company to borrow in increments of $10,000 at the beginning of each quarter, up to a total loan balance of $100,000. The interest rate orn these loans is 1%-per month, and for simplicty. we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the year i. At present, the company has no loans outstanding Required: 1a. Prepare a schedule of expected cash collections on sales by quarter and in total for Year 2. (Leave no be certain to enter "O" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash Collections irst Year 1- Fourth quarter sales Year 2-First quarter sales Year 2-Second quarter sales Year 2- Third quarter sales Year 2- Fourth quarter sales Total cash collections 1b. Propare a schodule of expected cash disbursements for merchandise purchases, by quarter and in total for Year 2. (Leave no cells blank - be certain to enter "0" wherever required. Omit the " sign in your response.) 1b. Prepare a schedule of expected cash disbursements for merchandise purchases, by quarter and in total for Year 2. (Leave no cells blank - be certain to enter "" wherever required. Omit the "$" sign in your response.) Schedule of Expected Cash Disbursements-Merchandise Purchases Year 1- Fourth quarter purchases Year 2- First quarter purchases Year 2-Second quarter purchases Year 2-Third quarter purchases Year 2- Fourth quarter purchases Total cash disbursements 2. Compute the expected cash disbursements for selling and administrative expenses, by quarter and in total, for Year 2. (Omit the "S" sign in your response.) Cash First Second Third Fourth$ Year except cash deficiency, repayments and interest which should be indicated by a minus sign Leave no cells blank - be certain to enter "O" wherever required. Omit the "$" sign in your Univax, Inc. Cash Budget Year 2 Quarter First Second Cash balance, beginning Add collections from sales Total cash available Less disbursements: Merchandise purchases Operating expenses Land Total disbursements Excess (deficlency) of receipts over disbursements Financing Borrowings Interest Total financing Cash balance, ending
