Question

Requirement: Complete the various budget schedules using Excel. Submit one hard copy per group and email me your Excel spreadsheet. In Excel use formulas wherever possible. Avoid “hard coding” because I will test the flexibility of your spread sheet by changing certain cells such as sales. To be discussed further in class as well.

The Distribution Center of 123 Oil and Gas Company wants a master budget for the next three months, beginning January 1st. It desires an ending minimum cash balance of $4,000 each month. Sales are forecasted at an average selling price/transfer price of $4 per widget. In January, the Distribution Centre is beginning just-in-time deliveries from suppliers, which means that purchases equal expected sales. The December 31 inventory balance will be drawn down to $5,000, which will be the desired ending inventory thereafter. Purchase price per widget is $2. Purchases during any given month are paid in full during the following month. All sales are on credit, payable within thirty days, but experience has shown that 60 percent of current sales are collected in the current month, 30 percent in the next month, and 10 percent in the month thereafter. Bad debts are negligible. The Distribution Centre sells to related sister corporations as well as outside/external sales. The following are some of the expenses for the Distribution Centre:

Wages and salaries                                                                                         $12,000/month

Insurance expired                                                                                                  100/month

Depreciation                                                                                                          200/month

Miscellaneous                                                                                                     2,000/month

Rent                                                         200/month + 10% of quarterly sales over $10,000

Cash dividends of $1,000 are to be paid quarterly, beginning January 15, and are declared on the fifteenth of the previous month. All operating expenses are paid as incurred, except insurance, depreciation, and rent. Rent of $200 is paid at the beginning of each month and the additional 10 percent of sales is paid quarterly on the tenth of the month following the quarter. The next settlement is due January 10.

The company plans to buy some new office fixtures for $2,000 cash in March. To the distribution company this will be considered a capital purchase.

Money can be borrowed and repaid in multiples of $500, at an interest rate of 12 percent per annum. Management wants to minimize borrowing and repay rapidly. Interest is computed and paid when the principal is repaid. Assume that borrowing takes place at the beginning, and repayment at the end, of the months in question. Money is never borrowed at the beginning and repaid at the end of the same month. Compute interest to the nearest dollar.

ASSETS AS OF DECEMBER 31,			LIABILITIES AS OF DECEMBER 31,
Cash	$4,000		Accounts payable (merchandise)	$28,750
Accounts receivable	16,000		Dividends payable	1,000
Inventory*	31,250		Rent payable	6,000
Prepaid insurance	1,200			$35,750
Fixed assets, net	10,000
	$62,450

*November 30 inventory balance = $12,500

Recent and forecasted sales:

October       $30,000     December     $20,000     February    $60,000      April   $36,000           

November   $20,000     January         $50,000     March        $30,000

Required

Prepare a master budget for the following schedules identified below. Use Excel and incorporate a formula based spread sheet whenever possible. I will be altering the sales figures in your submitted Excel spread sheet to test your formulas.

Purchase Budget

December is a reference month!	December	January	February	March
Desired Ending Inventory	31,250	5,000	5,000	5,000
Cost of Goods Sold	10,000
Total Needed	41,250	5,000	5,000	5,000
Beginning Inventory	12,500	31,250
Purchases	28,750

im not sure if i did this even remotely correctly so i really would appreciate any help!!!

Answer 1

Particulars	October	November	December	January	February	March	April
Beginning Cash				4,000	50	47,940	43,990
Cash In
Collection from Customer				38,000	53,000	41,000	36,600
Money Borrowed				9,000
	-	-	-	47,000	53,000	41,000	36,600
Cash Out
Payment towards widget				28,750	-	28,750	15,000
Wages & Salaries				12,000	12,000	12,000	12,000
Miscellaneuos				2,000	2,000	2,000	2,000
Cash Dividends				1,000	-	-	1,000
Rent				7,200	200	200	200
Office Fixtures				-	-	2,000	-
Borrowed Money Repaid					-9,090
	-	-	-	50,950	5,110	44,950	30,200
Ending Cash			4,000	50	47,940	43,990	50,390
Total Sales Value	30,000	20,000	20,000	50,000	60,000	30,000	36,000
Selling Price per widget	4	4	4	4	4	4	4
No. of Widget Sold	7,500	5,000	5,000	12,500	15,000	7,500	9,000
Purchase Price per widget	2	2	2	2	2	2	2
Total Purchase Value	15,000	10,000	10,000	25,000	30,000	15,000	18,000
Beginning Inventory			12,500	31,250	6,250	5,000	5,000
Purchases			28,750	-	28,750	15,000	18,000
			41,250	31,250	35,000	20,000	23,000
Cost of Goods Sold			10,000	25,000	30,000	15,000	18,000
Ending Inventory			31,250	6,250	5,000	5,000	5,000