We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securities, but if necessary we can get a short-term loan down at MetroBank. This statement by Beth Davies-Lowry, president of Global Electronics Company, concluded a meeting she had called with the firms top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firms main product lines are small kitchen appliances and power tools. Marcia Wilcox, Global Electronics general manager of marketing, has recently completed a sales forecast. She believes the companys sales during the first quarter of 20x1 will increase by 10 percent each month over the previous months sales. Then Wilcox expects sales to remain constant for several months. Globals projected balance sheet as of December 31, 20x0 is as follows: Cash $ 50,000 Accounts receivable 216,000 Marketable securities 20,000 Inventory 115,500 Buildings and equipment (net of accumulated depreciation) 542,000 Total assets $ 943,500 Accounts payable $ 154,350 Bond interest payable 4,000 Property taxes payable 6,000 Bonds payable (8%; due in 20x6) 120,000 Common stock 500,000 Retained earnings 159,150 Total liabilities and stockholders equity $ 943,500 Jack Hanson, the assistant controller, is now preparing a monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated:

1. Projected sales for December of 20x0 are $300,000. Credit sales typically are 80 percent of total sales. Globals credit experience indicates that 10 percent of the credit sales are collected during the month of sale, and the remainder are collected during the following month.

2. Global Electronics cost of goods sold generally runs at 70 percent of sales. Inventory is purchased on account, and 30 percent of each months purchases are paid during the month of purchase. The remainder is paid during the following month. In order to have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next months projected cost of goods sold.

3. Hanson has estimated that Globals other monthly expenses will be as follows: Sales salaries $ 10,000 Advertising and promotion 16,000 Administrative salaries 10,000 Depreciation 30,000 Interest on bonds 800 Property taxes 1,500 In addition, sales commissions run at the rate of 1 percent of sales.

4. Global Electronics president, Davies-Lowry, has indicated that the firm should invest $115,000 in an automated inventory-handling system to control the movement of inventory in the firms warehouse just after the new year begins. These equipment purchases will be financed primarily from the firms cash and marketable securities. However, Davies-Lowry believes that the company needs to keep a minimum cash balance of $15,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Hanson believes short-term interest rates will be 10 percent per year at the time of the equipment purchases. If a loan is necessary, Davies-Lowry has decided it should be paid off by the end of the first quarter if possible.

5. Global Electronics board of directors has indicated an intention to declare and pay dividends of $75,000 on the last day of each quarter.

6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on Global Electronics bonds is paid semiannually on January 31 and July 31 for the preceding six-month period. 7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. Required: Prepare Global Electronics Companys master budget for the first quarter of 20x1 by completing the following schedules and statements:

1. Sales budget: 20x0 20x1 December January March 1st Quarter $ 300,000 $ 330,000 $ 363,000$399,300 $1,092,300 218,460 873,840 Februar Total sales Cash sales Sales on account 60,000 240,000 66,000 264,000 72,600 290,400 79,860 319,440 2. Cash receipts budget: 20x1 March First Quarter $ 66,000 $ 72,600 $ 79,860$ 218,460 87,384 714,960 $ 308,400 339,240$ 373,164$ 1,020,804 January February Cash sales Cash collections from credit sales made during current month Cash collections from credit sales made during preceding month Total cash receipts 29,040 237,600 31,944 26,400 216,000 261,360 3. Purchases budget 20x0 20x1 December January February March 1st Quarter Budgeted cost of goods sold Add: Desired ending inventory Total goods needed Less: Expected beginning inventory Purchases 0 7. Prepare Global ectronics, budgeted income statement for the first quarter of 20x1 (Ignore income taxes 4. Cash disbursements budget: 20x1 GLOBAL ELECTRONICS COMPANY Budgeted Income Statement For the First Quarter of 20x1 January FebruaryMarch 1st Quarter Inventory purchases Cash payments for purchases during the current month Cash payments for purchases during the preceding month Total cash payments for inventory purchases Other expenses: Selling and administrative expenses: Sales salaries Advertising and promotion Interest on bonds Property taxes Sales commissions Total cash payments for other expenses Total cash disbursements Screen Shot 2018-11-28 at 10.47.20 PM Total selling and administrative expenses ' Search a Screen Shot 2018-11-28 at 10.47.40 PM Complete the first three lines of the summary cash budget. Then do the analysis of short-term financing needs in requirement (6). Then finish requirement (5). Search 20x1 8. Prepare Global Electronics' budgated statement of retained earnings for the first quarter of 20x1 JanuaryFebruary March 1st Quarter GLOBAL ELECTRONICS COMPANY Budgeted Statement of Retained Earnings For the First Quarter of 20x1 12/31x0 Cash receipts (from part 2) Less: Cash disbursements (from part 4) Change in cash balance during period due to 0 Retained eamings, Sale of marketable securities (1/2x1) Proceeds from bank loan (1/2/x1) Purchase of equipment Repayment of bank loan (3/31x1) Interest on bank loan Payment of dividends Change in cash balance during first quarter Cash balance, 1/1x1 Cash balance, 3/31x1 Retained eamings, 3/31/ Prepare Global Electronics budgeted balance sheet as of March 31, 20x1. (HintOn March 31, 20x1 Bond Interest Payable is $1,800 and Property Taxes Payable is $1,500.) 0 GLOBAL ELECTRONICS COMPAN Budgeted Balance Shect March 31, 20x1 a Screen Shot 2018-11-28 at 10.47.26 PM Q Search 6. Calculation of required short-term borrowing. 10 Projected cash balance as of December 31, 20x0 Less: Minimum cash balance Cash available for equipment purchases Projected proceeds from sale of marketable securities Cash available Less: Cost of investment in equipment Required short-term borrowing Total assets AM AM Total labilities and stocknolders' equity