Schedule of cash collections: | |||||
July | August | Sept | Quarter | ||
Collection: | |||||
June | 0 | 0 | |||
July | 180000 (30%) | 420000 (70%) | 600000 | ||
Aug | 273000 (30%) | 637000 (70%) | 910000 | ||
Sept | 142500 (30%) | 142500 | |||
Total exp. Collections | 180000 | 693000 | 779500 | 1652500 | |
Total Sales for the Quarter = $1985000 | |||||
A/R at the end of the Quarter (Sept sales still not collected) = 475000*0.7=$332500 | |||||
Inventory Purchase budget: | |||||
July | August | Sept | Quarter | ||
Sales | 600000 | 910000 | 475000 | ||
Cost of Merchandise as % of Sales | 45% | 45% | 45% | ||
Following Month's COGS | 409500 | 213750 | 173250 | ||
Desired Ending Inventory % | 20% | 20% | 20% | ||
Desired Ending Inventory Dollars | 81900 | 42750 | 34650 | ||
Budgeted Cost of Merchandise Sold | 270000 | 409500 | 213750 | ||
Plus Desired Ending Inventory | 81900 | 42750 | 34650 | ||
Total Inventory Needs | 351900 | 452250 | 248400 | ||
Less Beginning Inventory | 0 | 81900 | 42750 | ||
Required Purchases | 351900 | 370350 | 205650 | 927900 | |
Schedule of Expected Cash Disbursements - Purchases | |||||
July | August | Sept | Quarter | ||
For Purchases: | |||||
June | 0 | 0 | |||
July | 175950 | 175950 | 351900 | ||
Aug | 185175 | 185175 | 370350 | ||
Sept | 102825 | 102825 | |||
Total Disbursements | 175950 | 361125 | 288000 | 825075 | |
Cost of Merchandise Sold for the Quarter = 1985000 * 45% = $893250 | |||||
Ending Inventory at the end of the Quarter = Ending of Sept = $34650 | |||||
Ending A/P at the end of the Quarter = 50% of Sept purchases = 205650/2 = $102825 | |||||
Schedule of Selling and Administrative Budget: | |||||
July | August | Sept | Quarter | ||
Sales | 600000 | 910000 | 475000 | ||
Shipping as a Percentage of Sales | 5% | 5% | 5% | ||
Other Expenses as a Percentage of Sales | 8% | 8% | 8% | ||
Variable Expenses: | |||||
Shipping | 30000 | 45500 | 23750 | 99250 | |
Other Expenses | 48000 | 72800 | 38000 | 158800 | |
Total Variable Expenses | 78000 | 118300 | 61750 | 258050 | |
Fixed Expenses: | |||||
Salaries and Wages | 85000 | 85000 | 85000 | 255000 | |
Advertising | 50000 | 50000 | 50000 | 150000 | |
Prepaid Insurance | 3000 | 3000 | 3000 | 9000 | |
Depreciation | 25000 | 25000 | 25000 | 75000 | |
Total Fixed Expenses | 163000 | 163000 | 163000 | 489000 | |
Total Selling and Admin Expenses | 241000 | 281300 | 224750 | 747050 | |
Less: Non cash items (Dep. & Prepaid Ins.) | 28000 | 28000 | 28000 | 84000 | |
Total Cash Disbursements | 213000 | 253300 | 196750 | 663050 | |
Prepaid Insurance that is expensed during the quarter = 3000*3 = $9000 | |||||
Depreciation Expense recognized during the Quarter = 25000 * 3 = $75000 | |||||
CASH BUDGET : | |||||
July | August | Sept | Quarter | ||
Cash Balance Beginning | 0 | 35000 | 35000 | 0 | |
Add: Cash Collections | 180000 | 693000 | 779500 | 1652500 | |
Total Cash Available | 180000 | 728000 | 814500 | 1652500 | |
Less: Cash Disbursements: | |||||
For Inventory | 175950 | 361125 | 288000 | 825075 | |
For Operating Expenses | 213000 | 253300 | 196750 | 663050 | |
For Equipment | 200000 | 90000 | 0 | 290000 | |
For Cash Dividends | 50000 | 0 | 0 | 50000 | |
For Interest | 0 | 411.63 | 421.49 | 833.12 | (493950*1%*1/12) |
Total Cash Disbursements | 638950 | 704836.625 | 485171.49 | 1828958.1 | |
Excess (Deficiency) of Cash | -458950 | 23163.375 | 329328.51 | -176458.12 | |
Financing: | |||||
Borrowing | 493950 | 11836.625 | 0 | 505786.63 | |
Repayment | 0 | 0 | 294328.51 | 294328.51 | |
Total Financing | 493950 | 11836.625 | 294328.51 | 211458.12 | |
Cash Balance Ending | 35000 | 35000 | 35000 | 35000 | |
Outstanding loan balance = $505786.63 - 294328.51 = 211458.12 | |||||
Outstanding interest on borrowing (due on the following quarter) = (505786.63*1%*1/12 = $421.49 | |||||
(the repayment is being made at the end of sept after earning declaration) |
1: Prepare a sales budget, including a schedule of expected cash collections. 2: prepare a merchandise...
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