Yummy Delight is a frozen yoghurt store selling frozen yoghurt in one-kilogram sizes and has the following information:

Estimated Monthly Sales (in cups)

January to March: 45,000 per month

April to September: 70,000 per month

October to December: 22,000 per month

Frozen yogurt cups sell for $2.00 each from January 1st to March 31st, and $2.50 for April 1st to June 30th, $2.90 for July 1st to September 30th, and $3.00 for October 1st to December 31st. Half of the sales are paid in cash, and the other half is on account. 90% of the sales on account are collected in the current quarter, and the remaining 10% of credit sales are collected in the following quarter. The Accounts Receivable at December 31, 2018 was collected in January 2019.

Purchases and Inventory

Each cup requires 1kg of frozen yogurt and 1 cup. Frozen yogurt cost $14 for a 10kg tub and cups cost $10 for a box of 100 cups. All purchases are made on credit. Half of the purchases are paid for in the quarter of the purchase, and the other half is paid in the following quarter. (For simplicity, assume that the inventory has the same proportion of cups and frozen yogurt on hand, and that part boxes of cups and frozen yogurt can be purchased.) At the end of each quarter, they plan on having enough inventory on hand to cover of the sales for the next quarter.

Expenses and Disbursements

Fixed expenses are expected to be $20,500 per quarter (Salaries of $13,000 Rent of $3,000 and depreciation of $4,500). Rent is paid at the beginning of each month. The accounts payable at December 31 2018 was paid in full on January 31 2019.

Dividends

$340,000 of dividends are paid on June 30th, and $240,000 of dividends are paid on Sept 30th.

Line of Credit

The store has a line of credit that they can borrow from time to time. Assume that advances occur on the first day of each quarter, and repayments occur on the last day of each quarter. Any extra cash is first used to pay off the line of credit.

Interest payments are made on the 1st day of the following quarter. For example, interest for the period January 1st to March 31st is due April 1st. Interest is 3% per quarter.

Any extra cash is first used to pay off the line of credit. Assume that advances occur on the first day of each quarter, and repayments occur on the last day of each quarter.

The only line of credit activity in the last 3 months of 2018 was a Nov 1st advance of $6,000.

Cash

At the end of each quarter, the minimum cash balance is $1,000.

Beginning Balances at December 31, 2018

Cash $ 1,000

Inventory 5,000

Accounts Receivable 2,000

Equipment 180,000

Accumulated Depreciation (70,000)

Total Assets 118,000

Accounts Payable $22,000

Line of Credit 6,000

Retained Earnings 90,000

Total Liabilities and Equity 118,000

Required:

1. Complete the provided Excel schedules.

2. Prepare a balance sheet at December 31, 2019.

3. Prepare an income statement for the year ending December 31, 2019.

4. What is the purpose for Yummy Delight to budget and what can the stakeholders take from this? Do you have other recommendations?

A B C D E F G H 1 Required: NO 3 The cells coloured in yellow are provided information. Show any additional calculations. Yummy Delight 9 Monthly Cash Flow Forecast 10 for the year ending December 31 2019 11 12 ist 2nd 3ard 4th 13 cash - beginning 1,000 1,000 1,000 1,000 14 Cash receipts 15 Cash disbursements 16 cash before Line of Credit 1,000 1,000 1,000 1,000 17 Net Borrowing/(Replayments) 18 Cash - ending balance 1,000 1,000 1,000 1,000 19 20 Line of Credit - opening balance 6,000 6,000 6,000 6,000 21 add: Borrowing 22 Sub-total (subject to interest) 6,000 6,000 6,000 6,000 less: Repayment 24 Line of Credit - ending balance 6,000 6,000 6,000 6,000 25 Inventory (in $) 27 opening balance 5,000 5,000 5,000 5,000 28 add: purchases 29 less: amount sold 10 ending balance 5,000 5,000 5,000 5,000 31 32 Cash receipts 33 Cash disbursements 35 36 37A B C D E F G H I Yummy Delight Balance Sheet at December 31 2019 ASSETS Cash A/R Inventory Equipment Accumulated Depreciation: NBV Equipment 12 Total Assets - 3 4 LIABILITIES AND EQUITY A/P Line of Credit Accrued Interest Retained Earnings Opening 20 Income less: Dividends Ending Retained Earnings Total Liabilities and Equity: 24 27 Yummy Delight 8 Income Statement 9 for the year ending December 31 2019 30 31 Sales 12 COGS 33 Gross Profit 14 35 Expenses: 16 Fat expenses 10 Total Expenses Net Income