You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget.
Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company’s main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company’s sales will increase by 2 percent each month over the previous month’s sales from December 2019 through March 2020. Then sales are expected to remain constant for several months. Helping Hand’s projected balance sheet as of December 31, 2019 is as follows: Cash |
$ 140,000 |
Accounts receivable |
202,851 |
Marketable securities |
55,000 |
Inventory |
35,894 |
Buildings and equipment (net of accumulated depreciation) |
610,000 |
Total assets |
$ 1,043,745 |
Accounts payable |
$ 124,488 |
Sales commissions payable |
7,038 |
Bond interest payable |
5,000 |
Property taxes payable |
0 |
Bonds payable (3%; due in 2023) |
500,000 |
Common stock |
250,000 |
Retained earnings |
157,219 |
Total liabilities and stockholders' equity |
$ 1,043,745 |
5) Helping Hand’s board of directors has indicated an intention to declare and pay dividends of $100,000 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 Helping Hand’s bonds is paid semiannually on February 28 and August 31 for the preceding six-month period.
7) Property taxes are paid quarterly on March 31, June 30, September 30, and December 31 for the preceding three-month period.
5) Summary cash budget:
2020 |
|||
January |
February |
March |
1st Quarter |
Cash receipts (sch 2) |
|||
Less: Cash disbursements (sch 4) |
|||
Change in cash balance during period due to operations |
|||
Sale of marketable securities (1/2/20) |
|||
Proceeds from bank loan (1/2/20) |
|||
Purchase of equipment |
|||
Repayment of bank loan (3/31/20) |
|||
Interest on bank loan |
|||
Payment of dividends |
|||
Change in cash balance during the month |
|||
Beginning cash balance |
|||
Ending cash balance |
6) Prepare a memo to the president of Helping Hands Corp with at least two recommendations on how the company can ensure it completes the first quarter of 2020 with the minimum required cash balance. You should provide a plan to support your recommendation. For example, if you recommend an increase in sales, how can this be attained. Be specific. You should provide specific financial information for your recommendations utilizing your model (include a model for each of your recommendations). For example, if the company does X, the change in ending cash will be Y. Your model will become the property of Helping Hands Corp. and should be easy to use. Not buying the equipment is not an option. All assumptions are based on the purchase of the new equipment.
1) | Sales budget: | |||||||
Basis | 2015 | 2016 | 1stquarter | |||||
November | December | January | February | March | Total | |||
Total sales | 110% | 200,000 | 220,000 | 242,000 | 266,200 | 292,820 | 801,020 | |
Cash Sales 10% | 10% | 20,000 | 22,000 | 24,200 | 26,620 | 29,282 | 80,102 | |
Credit Sales 95% | 90% | 180,000 | 198,000 | 217,800 | 239,580 | 263,538 | 720,918 |
2) Cash Receipts Budget
2015 | 2016 | 1st quarter | ||||||
Collection% | November | December | January | February | March | Total | ||
i | Cash sales | 20,000 | 22,000 | 24,200 | 26,620 | 29,282 | 80,102 | |
ii | Collections from Credit sales | |||||||
made during the current month | 13% | 23,400 | 25,740 | 28,314 | 31,145 | 34,260 | 93,719 | |
iii | Collections from Credit sales | |||||||
made during preceeding month | 75% | - | 135,000 | 148,500 | 163,350 | 179,685 | 491,535 | |
iv | Collections from Credit sales | |||||||
made during preceeding 2 months | 10% | - | - | 18,000 | 19,800 | 21,780 | 59,590 | |
Total Cash Receipts | 43,400 | 182,740 | 219,014 | 240,915 | 265,007 | 724,936 | ||
Note : Bad Debts are 2% of Credit Sales | 2% | 3,600 | 3,960 | 4,356 | 4,792 | 5,271 | 21,978 |
3) | Purchases Budget | ||||||||
2015 | 2016 | ||||||||
Basis | November | December | January | February | March | 1st quarter | April | ||
i | Sales | 200,000 | 220,000 | 242,000 | 266,200 |
You have been engaged as a consultant to design a master budget model and then to...
You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company's main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company's sales will increase by 2 percent each month over the previous month's sales...
PLEASE SHOW ALL WORK!! You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company’s main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company’s sales will increase by 2 percent each month over...
You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company's main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company's sales will increase by 2 percent each month over the previous month's sales...
Please show ALL work, including formulas used and equations for excel You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company’s main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast. She believes the company’s sales will...
If you could please explain and show your work that would be
great! Thank you so much!
You have been engaged as a consultant to design a master budget model and then to assist Helping Hand Corp. in making some management decisions based on that master budget. Helping Hand is a small, rapidly growing wholesaler of consumer electronic products. The company's main product lines are small kitchen appliances and power tools. The marketing manager has recently completed a sales forecast....
1) Projected sales for November 2019 are $230,000. Credit sales
are typically 85% of total sales. Helping Hand’s credit experience
indicates that 12% of credit sales are collected during the month
of sale, 74% in the month following the sale, and 14% in the second
month following the sale. Experience shows the remaining credit
sales are uncollectible.
2) Helping Hand’s cost of goods sold generally runs at 60% of
sales. Inventory is purchased on account and 12% of each month’s...
1) Projected sales for November 2019 are $230,000. Credit sales
are typically 85% of total sales. Helping Hand’s credit experience
indicates that 12% of credit sales are collected during the month
of sale, 74% in the month following the sale, and 14% in the second
month following the sale. Experience shows the remaining credit
sales are uncollectible.
2) Helping Hand’s cost of goods sold generally runs at 60% of
sales. Inventory is purchased on account and 12% of each month’s...
Problem 8-31 Completing a Master Budget [LO8-2, LO8-4, LO8-7, LO8-8, LO8-9, LO8-10]Hillyard Company, an office supplies specialty store, prepares its master budget on a quarterly basis. The following data have been assembled to assist in preparing the master budget for the first quarter: As of December 31 (the end of the prior quarter), the company’s general ledger showed the following account balances: DebitsCreditsCash$64,000Accounts receivable219,200Inventory61,350Buildings and equipment (net)374,000Accounts payable$92,325Common stock500,000Retained earnings126,225$718,550$718,550 Actual sales for December and budgeted sales for the next four months are...
Case 8-33 Master Budget with Supporting Schedules (L08-2, LO8-4, LO8-8, LO8-9, LO8-10] You have just been hired as a new management trainee by Earrings Unlimited, a distributor of earrings to various retail outlets located in shopping malls across the country. In the past, the company has done very little in the way of budgeting and at certain times of the year has experienced a shortage of cash. Since you are well trained in budgeting, you have decided to prepare a...
PLEASE HELP! The master budget must be completed using formulas.
there must be a sales budget, production budget, Direct Materials
budget, Direct labor budget, manufacturing overhead budget, selling
and admin budget, budgeted income statement, Schedule of exp
collections, sch of exp payments, sch of exp payments DM, cash
budget, and budgeted balance sheet. please include the formulas you
used.
Purpose: The purpose of this project is to help you practice and reinforce the steps necessary to complete a Master Budget,...