Beruflich Dokumente
Kultur Dokumente
It desired an ending minimum cash balance of $4000 each month. Sales are forecasted at average selling prices of $4 per unit. Inventories are supposed to equal 125% of the next months sales in UNITS, except for the end of March. The March 31 inventory in units should be 75% of the next months sales. (i.e. Aprils sales in units). Merchandise costs are $2 per unit. Purchases during any given month are paid in full during the following month. All sales are on credit, payable within 30 days, but experience has shown that 40% of current sales are collected in the current month, 40% in the next month, and 20% in the month thereafter. Bad debts are negligible. (Ignore federal and state income taxes.) Monthly operating expenses are as follows: Wages and salaries (cash) Miscellaneous (cash) Rent Insurance Expired Depreciation $12,000 2,000 100 + 10% of monthly sales 100 100
Cash dividends of $1000 are to be paid Quarterly, beginning January 15, and are declared on the 15th of the previous month. All operating expenses are paid as incurred, except insurance, depreciation, and rent. Rent of $100 is paid at the beginning of each month, and the additional rent of 10% of sales is paid quarterly on the tenth of the month following the quarter. The next settlement is due January 10 th. The CELLO Comapany plans to buy some new furniture and fixtures for $2000 cash in March. Money can be borrowed or repaid in multiples of $500, at an interest rate of 6% 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. (round up). The CELLO Company Balance Sheet 12/31/08 Assets Liabilities Cash $4,000 Accounts Payable (Mdse.) $28,750 Accounts Receivable 16,000 Dividends Payable 1,000 Inventory 31,250 Rent Payable 7,000 Prepaid insurance 1,200 Total Liabilities $36,750 Fixed Assets-net Total 10,000 $62,450 Stockholders Equity Common Sock Retained Earnings Total Total Liabilities & Equity
Recent and Forecasted Sales: October $30,000 January $50,000 November $20,000 February $55,000 December $20,000 March $12,000
Recent and Forecasted Sales: October $30,000 January $50,000 April $36,000 November $20,000 February $55,000 December $20,000 March $12,000
Required: Prepare a Master Budget, including a budgeted balance sheet, budgeted income statement, cash flow statement, cash receipts and disbursements (cash budget), and supporting budgets and schedules for the first quarter only of 2009. Explain the roll cash flow analysis plays in the effective management of the organization. What if CELLO did not have access to a bank line of credit? What other sources of cash are available for Management to utilize to bridge cash shortfalls?
hs beginning 0 each month. Sales supposed to equal h. The March 31 s sales in units). are paid in full 0 days, but rrent month, 40% gligible. (Ignore
% of monthly sales
15, and are declared incurred, except g of each month, f the month
for $2000 cash in interest rate of 6% dly. Interest is ing takes place at Money is never Compute interest
e.)
Equity
Monthly operating expenses are as follows: Wages and salaries (cash) $12,000 Miscellaneous (cash) 2,000 Rent 100 + 10% of monthly sales Insurance Expired 100 Depreciation 100 Cash dividends of $1000 are to be paid Quarterly, beginning January 15, and are declared on the 15th of the previous are paid as incurred, except insurance, depreciation, and rent. Rent of $100 is paid at the beginning of each month, a The CELLO Comapany plans to buy some new furniture and fixtures for $2000 cash in March. Money can be borrow
CASH BUDGET
January CASH BALANCE (Beginning) BORROWING Cash BaLANCE after borrowing Add Cash Collections Total cash available Less Disbursements For Inventory Purchases For Operating Expenses Extra Rent For Equipment Purchases For Dividends Total Disbursement Excess/(Deficiency) Of Cash INTEREST REPAYMENT Closing Balance 4000 0 4000 32,000 36,000 28,125 14100 7000 1000 50,225
(14,225.00)
Febuary
(14,225.00)
March
16,957.50
14,725
35,550.00
28100
25,657.50
0 0 25658
on the 15th of the previous month. All operating expenses beginning of each month, and the additional rent of 10% of sales is paid quarterly on the tenth of the month following the quarter arch. Money can be borrowed or repaid in multiples of $500, at an interest rate of 6% per annum. Management wants to minimi
the month following the quarter. The next settlement is due January 10th. m. Management wants to minimize borrowing and repay rapidly. Interest is computed and paid when the principal is repaid. Assu
hen the principal is repaid. Assume that borrowing takes place at the beginning, and repayment at the END of the months in que
t the END of the months in question. Money is never borrowed at the beginning and repaid at the end of the SAME month. Com
e end of the SAME month. Compute interest to the nearest dollar. (round up).
Westex Products is a wholesale distributor of industrial cleaning products. When the treasurer of Westex Products approach Since the treasurer is unsure as to the particular quarters in which bank financing will be needed, he has assembled the follow a. Budgeted sales and merchandise purchases for next year, as well as actual sales and purchases for the last quarter of the cu Merchandise Sales Purchases Current year Fourth quarter actual $200,000 $126,000 Next year First quarter estimated $300,000 $186,000 Second quarter estimated $400,000 $246,000 Third quarter estimated $500,000 $305,000 Fourth quarter estimated $200,000 $126,000
b. The company normally collects 65% of a quarters sales before the quarter ends and another 33% in the following quarter. c. Eighty percent of a quarters merchandise purchases are paid for within the quarter. The remainder is paid in the following d. Operating expenses for next year are budgeted at $50,000 per quarter plus 15% of sales. Of the fixed amount, $20,000 ea e. The company will pay $10,000 in dividends each quarter. f. Equipment purchases of $75,000 will be made in the second quarter, and purchases of $48,000 will be made in the third qu g. The Cash account contained $10,000 at the end of the current year. The treasurer feels that this represents a minimum ba h. Any borrowing will take place at the beginning of a quarter, and any repayments will be made at the end of a quarter at an i. At present, the company has no loans outstanding. Required: 1. Prepare the following by quarter and in total for next year: a. A schedule of expected cash collections
Recent and Projected
Expected cash disbursements for operating expenses, by quarter and in total, for nex
Operating expenses
3. Prepare a cash budget, by quarter and in total, for next year. Show clearly in your budget the
CASH BALANCE (Beginning) Loan taken Add Cash Collections Total cash available Less Disbursements For Purchases For Operating Expenses For Equipment Purchases Dividend payments Total Disbursement Excess/(Deficiency) Of Cash INTEREST REPAYMENT Closing Balance
Westex Products approached the companys bank late in the current year seeking short-term financing, he was told that money was very t has assembled the following information to assist in preparing a detailed cash budget: r the last quarter of the current year, are:
in the following quarter. The remainder is uncollectible. This pattern of collections is now being experienced in the current years fourth der is paid in the following quarter. ixed amount, $20,000 each quarter is depreciation.
ill be made in the third quarter. These purchases will be for cash. represents a minimum balance that must be maintained. the end of a quarter at an annual interest rate of 10%. Interest is paid only when principal is repaid. All borrowings and all repayments of
Annual
$863,000
in your budget the quarter(s) in which borrowing will be necessary and the quarter(s) in which repaymen
Q3 (38,000.00)
48,000.00
1200
12,000.00
(38,000.00)
9,600.00
as told that money was very tight and that any borrowing over the next year would have to be supported by a detailed statement of cash
rowings and all repayments of principal must be in round $1,000 amounts. Interest payments can be in any amount. (Compute interest o
ed by a detailed statement of cash collections and disbursements. The treasurer also was told that it would be very helpful to the bank if
uld be very helpful to the bank if borrowers would indicate the quarters in which they would be needing funds, as well as the amounts th
g funds, as well as the amounts that would be needed, and the quarter in which repayments could be made.
Pro-Forma Income Statement Gamma Manufacturing, Inc., is a manufacturer of electric pencil sharpeners. The following is information regarding Gamma Manufacturing for the fiscal year-end, May 31, 2009: Assume a tax rate of 33%. Prepare a pro-forma income statement for the year ended May 31, 2009, for Gamma Manufacturing, Inc. (Note that Gamma Manufacturing does not have work inprocess inventory.)
Beginning finished goods inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,000 Ending finished goods inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,000 Selling and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69,000 Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445,000 Direct materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,000 Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000 Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,000
Personal Budgeting George Marcus, a recent college graduate, has been hired by Taylor Corporation at a salary of $54,000 per year. In anticipation of his salary, George purchased a $20,000 new ski boat and will pay for it at a rate of $425 per month, including interest, for five years. He also rented a condominium for $600 a month and bought a car on account for $350 a month. In addition, George figures that his other monthly expenses will be:
Food expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $250 Clothing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Entertainment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150 Gas and other car expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
1. On the assumption that George also pays income and FICA taxes of 25 and 7.65%, respectively, prepare his monthly budget. 2. George plans to save enough money for a down payment on a house. If a $20,000 down payment is needed, how long will it take him to save the needed amount? (For this exercise, ignore interest on savings, and assume that George does not have any savings at the present time.)
MONTHLY BUDGET Gross Salary Less Federal Income taxes FICA taxes Net take home pay
54000
Less Annual Expenses EMI payments Other Monthly expenses Net Surplus Q2. It will take around : 20000/6609 3.026176 years
ctively,
Personal Budgeting Jennifer Swartz works as an interior decorator for Modern Fashion Corporation. Her annual salary is $36,500. Of that amount, 20% is withheld for federal income taxes, 7.15% for state taxes, 7.65% for FICA taxes, and contribution the United Way. 5% deposited directly into a company union savings. Jennifer has four monthly payments: $225 for her $80 for furniture, $rent, and to repay college loans. Jennifers other monthly expenses approximately:
Food expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . $250 Clothing expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .100 Entertainment expense . . . . . . . . 125 Utilities expense . . . . . . . 80 Insurance expense . . ... . 30 Gas and maintenance expenses on car . . . . . . . . . . . 180 Miscellaneous expenses . . . . . . . . . . . . . . . . . . . . . . . . 200 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . $965
Prepare both a monthly budget and an annual budget for Jennifer that identifies gross salary, net take-home pay, net disposable income, and net surplus or deficit.
Gross Salary Less Federal Income taxes State taxes FICA taxes Net take home pay Less Union Savings Net Disposable Income Less Annual Expenses Four monthly payments Monthly expenses Net Surplus
36500
Recent and Forecasted Sales: October $30,000 January $50,000 April $36,000 November $20,000 February $55,000 December $20,000 March $12,000
All sales are on credit, payable within 30 days, but experience has shown that 40% of current sales are collected in in the current month, 30% in the next month, and 10% in the month thereafter.
Schedule of Expected Sales
November
From Cash Sales
December
Inventories are supposed to equal 125% of the next months sales in UNITS, except for the end of March.
The March 31 inventory in units should be 75% of the next months sales. (i.e. Aprils sales in units). Merchandise costs are $2 per unit. Purchases during any given month are paid in full during the following month.
Inventory Purchases Bu
January 10,000
Febuary 28,125
March 625
INCOME STATEMENT FOR THE QUARTER ENDED 31st MARCH IN$ SALES LESS COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSES INSURANCE PROFIT BEFORE DEPRECIAITON DEPRECIATION Profit After DEPRECIAITON Interst Profit DIVIDEND Retained Earning
117,000 (29,250) 87,750 (49,300) (300) 38,150 (300) 37,850 (93) 37,758 (1,000) 36,758
BALANCE SHEET FOR THE QUARTER ENDED 31st March IN$ CASH ACCOUNTS RECEIVABLE INVENTORY BUILDING & EQUIPMENT Unexpired Insurance ACCOUNTS PAYABLE RETAINED EARNING Common stock
25658 18200 13500 11700 900 12000 51758 10700
IN$
ent sales are collected in the current month, 40% in the next month, and 20% in the month thereafter. Bad debts are negligible. (Ignore f
Ist Quarter
d of March.
Merchandise costs
April
Ist Quarter
9000
29250
38,750
Accounts Payable
12000