The president of Univax, Inc, has just approached the compeny'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: Mercha Purchases Sales Year 1: Fourth quarter actual $200,000 $100,000 Year 2 First quarter estimated $300.000 $180,000 Second quarter estimated $400.000 $230,000 Third quarter estimated $500:000 $290.000 Fourth quarter estimated $380.000 $160,000 b. The company typically collects 38% of c. Some 10% of a quarters merchandise purchases are paid for within the quarter. The remainder is d. Selting e. The company will pay $11,000 in cash divicends each quarter f Land a quarter's sales before the quarter ends and another 60% in ctions is now being the following quarter. The remainder is uncollectible. This pattern of colle experienced in the actual data for the Year 1 fourth quarter paid in the following quarter sales. Of the fixed amount, $10,000 each quarter is depreciation. n the third quarter and administrative expenses for Year 2 are budgeted at S80.000 per quarter plus 10% of purchases will be made as follows during the year $81,000 in the second quarter and $47.000 The Cash account contained $21,000 at the end of Year 1. The company must maintain a minimum he company has an agreement with a local bank that alows the company to borrow in increments of $10,000 at the beginning of each quarter, up to a total loan balance of $100.000. The interest rate S 1% per month, and for simplicity, we will assume that interest is not compounced. at the end of the The company would, as far as it is able, repay the loan plus accumulated interest year i. Al present, the company has no loans outstanding Required 1a. Prepare a schedule of expected cash collections on sales by quarter and in total for Year 2 (Leave no cells blank - be certain to enter "0" wherever required. Omit the the "$" sign in your 1a. Prepare a schedule of expected cash collections on sales by quarler and in total for Year 2. (Leave wherever required. Omlt the"$" sign In your no cells blank be certain to enter response.) le of Expected Ca Year 2 Quarter 165,000$ Year 1-Fourth quarter sales Year 2- First querter sales 206,400 265,000 215,000 Year 2-Second quarter sales Year 2-Third quarter sales Year 2-Fourth quarter sales 254,000 302,400 315,000 244,800 s 371,400 469,400 $ Total cash collections 1b. Prepare a schedule of expected cash disbursements for merchandise purchases, by quarter and in total for Year 2. (Leave no cells blank- be certaln to enter "0" wherever required. Omit the "$ sign in your response.) of Expected Cash Disbursements-Merchandise Purchases Schedule Year 2 Quarter Fourth Total First Year 1- Fourth quarter purchases Year 2- First quarter purchases Year 2-Seoond 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 "$" sign in your response.) Cash Disburs First Second Third Fourth Year Univax, Inc. Cash Budget Year 2 Quarter First Second Third Year Cash balance, beginning Add collections from sales Total cash available Less disbursements: Merchandise purchases Operating expenses Dividends Land Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, ending
