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You are getting ready to prepare the master budget for the month of April, Year 5. Your company's balance sheet for March 31st is:
You are getting ready to prepare the master budget for the month of April, Year 5. Your company's balance sheet for March 31st is: My Company Balance Sheet March 31, Year 5 Assets: Liabilities & Stockholders' Equity: Cash $120,000 Accounts Payable $ 93,000 Accounts Rec'd Inventory Plant and equipment, net Total Assets $862,000 Total Liabilities and Stock. Eq. 40,000 Common Stock 42,000 Retained Earnings 560,000 586,000 183,000 $862,000 The following estimates and assumptions have been decided on by the budget committee: a. Estimated sales for April and May are $310,000 and $320,000, respectively b. Each month's sales are 30% cash and 80% credit. Each month's credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the March accounts receivable will be collected in April. c. Each months ending inventory should be 25% of the cost of the next month's sales. Cost of goods sold is 62% of sales. The company pays for its inventory 60% in the month of the purchase and 40% in the month following the purchase. All March accounts payable will be paid in April. d. Monthly selling and administrative expenses are $50,000, of which $10,000 is depreciation. All other S&A expenses are paid as incurred. e. The company plans to sell equipment that cost $20,000 that has a book value of $5,000 in April and has an offer of $7,000 to purchase the equipment. f. The company declared a $2,000 dividend in March, payable in May. g. The company does not plan to borrow any money or issue any stock in April. 1. Prepare a summary of April cash collections and disbursements for inventory and prepare the April cash budget. 2. Prepare a budgeted income statement and balance sheet for April using GAAP (absorption costing). 3. BONUS: Calculate accounts receivable and inventory turnover for the month of April. 4. BONUS: Using the indirect method, create an estimated statement of cash flows.
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