Question

Question 9 

Prepare a cash disbursement schedule for the months of April, May and June 2019 for Mario Brothers, Inc. based on the following information: 

a.Sales: February = $500,000; March = $500,000; April = $560,000; May = $610,000; June = $650,000; July = $650,000 

b. Purchases are calculated as 60% of the next month's sales, 10% of purchases are made in cash, 50% of purchases are paid for 1 month after purchase, and the remaining 40% of purchases are paid for 2 months after purchase. 

c.The firm pays rent of $8,000 per month. 

d. Base wage and salary costs are fixed at $6,000 per month plus a variable cost of 7% of the current month's sales. 

e. A tax payment of $54,500 is due in June 

f. New equipment costing $75,000 will be bought and paid for in April 

g. An interest payment of $30,000 is due in June 

h. Dividends of $12,500 will be paid in April 

i. No principal repayments or retirements are due during these months 

Question 10 

Prepare a 2013 proforma balance sheet for Blue Mango Inc. based on the 2012 balance sheet and the conditions below. Indicate the amount, if any, of external financing, that Blue Mango will need for 2013. 

a. The company expects sales of $3 million for 2013 

b. The company wants to maintain a minimum cash balance of $50,000. 

c. A new machine that costs $90,000 will be purchased during 2013 and total depreciation for the year will be $32,000 

d. Marketable securities are expected to remain the same. 

Answer 1

1. Schedule of Cash Disbursement -

Mario Brothers Inc. Schedule of Cash Disbursement April May June Quarter Cash Purchase $ 36,600 $ 39,000 $ 39,000 $ 114,600 Credit Purchase Payment $ 259,200 $285,660 $ 307,260 $ 852,120 Rent Paid $ 8,000 $ 8,000 $ 8,000 $ 24,000 Wages & Salary Cost $ 45,200 $ 48,700 $ 51,500 $ 145,400 Tax Payment $ 54,500 $ 54,500 New Equipment $ 54,500 $ 54,500 Interest Payment $ 30,000 $ 30,000 Dividend Paid $ 12,500 $ 12,500 Total Cash Disbursement $ 416,000 $381,360 $ 490,260 $1,287,620

2. Working Notes -

Working Notes February March April May June July a Sales $ 500,000 $ 500,000 $ 560,000 $ 610,000 $ 650,000 $ 650,000 b Purchases 60% $ 300,000 $ 336,000 $ 366,000 $ 390,000 $390,000 Cash Purchase Credit Purchase 10% 90% $ 30,000 $ 33,600 $ 36,600 $ 39,000 $ 39,000 $ 270,000 $ 302,400 $ 329,400 $ 351,000 $ 351,000 Credit Payment In the Following Month In the 2 Month After Total 50% 40% $ 135,000 $ 151,200 $ 164,700 $ 175,500 $ 108,000 $ 120,960 $ 131,760 $ 259,200 $ 285,660 $ 307,260 с Rent Paid $ 8,000 $ 8,000 $ 8,000 $ 8,000 $ 8,000 d Wages & Salary Cost Fixed Variable Total 7% $ $ $ 6,000 $ 6,000 $ 35,000$ 35,000 $ 41,000 $ 41,000 $ 6,000 $ 6,000 $ 39,200 $ 42,700$ 45,200 $ 48,700$ 6,000 45,500 51,500 e Tax Payment $ 54,500 f New Equipment $ 54,500 8 Interest Payment $ 30,000 h Dividend Paid $ 12,500

Answer 2

You have just been hired as a management trainee by Cravat Sales Company, a nationwide distributor of a desiener's silk ties. The company has an exclusive franchise on the distribution of the ties, and sales have grown so rapidly over the last few years that it has become necessary to add new members to the manage ment team. You have been given responsibility for all planning and budgeting. Your first assignment is to prepare a master budget for the next three months, starting April 1. You are anxious to make a favourable impression on the president and have assembled the information below. The company desires a minimum ending cash balance each month of $10,000. The ties are sold to retailers for $8 each. Recent and forecasted sales in units are as follows: CHECK FIGURES 1. June ending cash balance: $10,730; 2. Net income:
$151,880 January (actual)     20,000 February (actual)     24,000 March (actual)     28,000 April     35,000 May     45,000 June     60,000 July     40,000 August     36,000 September     32,000 The large buildup in sales before and during June is due to Father's Day. Ending inventories are supposed to equal 90% of the next month's sales in units. The ties cost the company $5 each. Purchases are paid for as follows: 50% in the month of purchase and the remaining 50% in the following month. All sales are on credit, with no discount, and payable within 15 days. The company has found, how-ever, that only 25% of a month's sales are collected by month-end. An additional 50% are collected in the following month, and the remaining 25% are collected in the second month following sale. Bad debts have been negligible. The company's monthly selling and administrative expenses are given below: Variable:     Sales commissions     $1 per tie Fixed:     Wages and salaries     $22,000     Utilities     $14,000     Insurance     $1.200     Depreciation     $1,500     Miscellaneous     $3,000 All selling and administrative expenses are paid during the month, in cash, with the exception of depreciation and insurance expired. Land will be purchased during May for $25,000 cash. The company declares dividends of $12,000 each quarter, payable in the first month of the following quarter. The company's balance sheet at March 31 is given below: Assets     Cash $ 14.000     Accounts receivable ($48,000 February sales; $168,000 March sales) 216.000     Inventory (31,500 units) 157,500     Prepaid insurance 14,400     Fixed assets, net of depreciation 172,700     Total assets $574 600 Liabilities and Shareholders' Equity     Accounts payable $ 85.750     Dividends payable 12,000     Common shares 300.000     Retained earnings 176,850     Total liabilities and shareholders' equity $574,600 The company has an agreement with a bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $140,000. The interest rate on these loans is 1% per month, and for simplicity, we will assume that interest is not compounded. At the end of the quarter, the company would pay the bank all of the accumulated interest on the loan and as much of the loan as possible (in increments of $1.000), while still retaining at least $10,000 in cash. Required: Prepare a master budget for the three-month period ending June 30. Include the following detailed budgets:    •  A sales budget by month and in total. • A schedule of expected cash collections from sales, by month and in total. • A merchandise purchases budget in units and in dollars. Show the budget by month and in total. • A schedule of expected cash disbursements for merchandise purchases, by month and in total. • A cash budget. Show the budget by month and in total. • A budgeted income statement for the three-month period ending June 30. Use the contribution approach. • A budgeted balance sheet as of June 30.