1. Caribbean Health Foods had sales of $125,000 in March. and Forecast sales for April is expected to be 130,000. The firm has a cash balance of $5,000 on April 1 and wishes to maintain a minimum cash balance of $25,000. (1) The firm makes 70% of sales for cash, 30% are collected in the next month. (2) The firm's actual for March is $75,000 and the expected purchases for April is $80,000, 50% made for cash and 50% paid in the next month. (3) Rent is $10,000 per month. (4) Wages and salaries are 45% of the previous month's sales. (5) Cash dividends of $5,000 will be paid in April. (6) Payment of principal and interest of $4,000 is paid monthly. (7) A cash purchase of equipment costing $10,000 is scheduled in April. (8) Taxes of $2,000 are due in April. Requirement: Given the above data, prepare and interpret a cash budget for the month of April.
1. Caribbean Health Foods had sales of $125,000 in March. and Forecast sales for April is expected to be 130,000. The firm has a cash balance of $5,000 on April 1 and wishes to maintain a minimum cash balance of $25,000. (1) The firm makes 70% of sales for cash, 30% are collected in the next month. (2) The firm's actual for March is $75,000 and the expected purchases for April is $80,000, 50% made for cash and 50% paid in the next month. (3) Rent is $10,000 per month. (4) Wages and salaries are 45% of the previous month's sales. (5) Cash dividends of $5,000 will be paid in April. (6) Payment of principal and interest of $4,000 is paid monthly. (7) A cash purchase of equipment costing $10,000 is scheduled in April. (8) Taxes of $2,000 are due in April. Requirement: Given the above data, prepare and interpret a cash budget for the month of April.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:BARRY'S SUPERSTORE
BARRY'S SUPERSTORE
Comparative Year-End Income Statements
Comparative Year-End Balance Sheets
Prior Year
Current Year
Prior Year Current Year
Assets:
Cash
Net Sales
$100,000
$120,000
Cost of Goods Sold
50.000
60,000
$90,000
$110,000
Gross Profit
50,000
60,000
Accounts Receivable
20,000
30,000
35,000
15,000
160,000
40,000
$200.000
Inventory
40,000
5,000
20,000
200.000
50,000
$250.000
Rent Expense
Depreciation Expense
5,500
Short-Term Investments
2.500
3,600
Total Current Asstes
Salaries Expense
Utlity Expense
3,000
5,400
Equipment
Total Assets
1.500
2,500
Operating Income
38,000
43,000
Liabilities:
$ 75.000
25.000
100,000
Accounts Payable
$ 60.000
Interest Expense
3,000
2,000
Unearned Revenue
10.000
Income Tax Expense
70,000
5.000
$ 30,000
6,000
Total Current Liabilities
Net Income
$ 35,000
Notes Payable
Total Liabilities
40,000
110,000
50,000
150.000
Stockholder Equity
Common Stock
75,000
80.000
Ending Retained Earnings
Total Stockholder Equity
Total Liabilities and Stockholder Equity
20.000
100.000
15,000
90,000
$200.000
$250.000
Transcribed Image Text:1. Caribbean Health Foods had sales of $125,000 in March. and Forecast sales for April
is expected to be 130,000. The firm has a cash balance of $5,000 on April 1 and
wishes to maintain a minimum cash balance of $25,000.
(1) The firm makes 70% of sales for cash, 30% are collected in the next month.
The firm's actual for March is $75,000 and the expected purchases for April is
$80,000, 50% made for cash and 50% paid in the next month.
Rent is $10,000 per month.
(4) Wages and salaries are 45% of the previous month's sales.
(5) Cash dividends of $5,000 will be paid in April.
(6) Payment of principal and interest of $4,000 is paid monthly.
(7) A cash purchase of equipment costing $10,000 is scheduled in April.
(8) Taxes of $2,000 are due in April.
Requirement:
Given the above data, prepare and interpret a cash budget for the month of April.
2. Barry's Superstore wishes to prepare financial plans. Use the financial statements on
the next page and the other information provided below to prepare the financial plans.
The following financial data are also available:
(1) The firm has estimated that its sales for next year will be $130,000.
(2) The firm expects to pay $30,000 in cash dividends.
(3) The firm wishes to maintain a minimum cash balance of $25,000.
(4) Accounts receivable represent approximately 20% of annual sales.
(5) The firm's ending inventory represents 60% of Cost of Goods Sold.
(6) A new machine costing $15,000 will be purchased next year.
(7) Accounts payable will increase by 5%.
(8) Uneamed Revenue will be earned.
(9) Notes Payable would decrease by $5000.
(10) Short-Term Investments and common stock will remain unchanged.
Requirement:
a. Prepare a pro forma income statement for the year ended December 31, 2021, using
the percent-of-sales method. Tax Rate is expected to be 15%.
b. Prepare a pro forma balance sheet dated December 31, 2021, using the judgmental
approach.
c. Analyze these statements, and discuss the resulting external financing required
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