The baseball caps are sold to retailers for $15 each. Actual unit sales for the second quarter and budgeted unit sales for the third quarter plus October are as follows:UnitsMay (actual) 100,000June (actual) 120,000July (budgeted) 125,000August (budgeted) 130,000September (budgeted) 120,000October (budgeted) 140,000Ending inventories should be equal to 25% of the following month’s sales. The baseball caps cost the company $8 each. Purchases from the supplier are paid as follows:60% in month of purchase40% in month following purchaseAll sales to retailers are made on account with no discounts offered and cash receipts from customers as follows:25% collected in the month of sale65% collected in the month following the sale10% collected in the second month following the saleAs the sales are made to established retailers, there are no bad debts. The company’s monthly selling and administra0ve expenses are as follows:Variable:Sales commissions 5% of salesFixed:Advertising $450,000Rent 20,000Salaries and wages 185,000Power and heat 34,000Insurance 4,000Depreciation 20,000All selling and administra0ve expenses are paid in the month they are incurred except for rent which is paid every six months in February and August. Deprecia0on is a non-cash expense and includes depreciation on the new equipment. The company plans to purchase new equipment costing $80,000 in September. The company declared a $50,000 dividend in June that is payable in July. The following is the company’s balance sheet at June 30:ASSETSCash $ 100,000Accounts receivable (from May & June sales) 1,500,000Inventory 250,000Prepaid rent 20,000Fixed assets (net of deprecia0on) 860,000TOTAL ASSETS $2,730,000LIABILITIES & SHAREHOLDERS’ EQUITYAccounts payable $ 388,000Dividends payable 50,000Common shares 940,000Retained earnings 1,352,000TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY $2,730,000The company is required to maintain a minimum cash balance of $100,000 at the end of each month. All borrowing on the company’s line of credit is done at the beginning of each month and repayments are made at the end of the month and borrowing must be done in increments of $1,000. The interest rate on the line of credit is 1% per month and must be paid at the end of each month based on the loan outstanding for that month. How would you produce a cash budget by moth and in total for the 3 month period ending Sept 30? Thank youuu
The baseball caps are sold to retailers for $15 each. Actual unit sales for the second quarter and budgeted unit sales for the third quarter plus October are as follows:
Units
May (actual) 100,000
June (actual) 120,000
July (budgeted) 125,000
August (budgeted) 130,000
September (budgeted) 120,000
October (budgeted) 140,000
Ending inventories should be equal to 25% of the following month’s sales. The baseball caps cost the company $8 each. Purchases from the supplier are paid as follows:
60% in month of purchase
40% in month following purchase
All sales to retailers are made on account with no discounts offered and cash receipts from customers as follows:
25% collected in the month of sale
65% collected in the month following the sale
10% collected in the second month following the sale
As the sales are made to established retailers, there are no
Variable:
Sales commissions 5% of sales
Fixed:
Advertising $450,000
Rent 20,000
Salaries and wages 185,000
Power and heat 34,000
Insurance 4,000
All selling and administra0ve expenses are paid in the month they are incurred except for rent which is paid every six months in February and August. Deprecia0on is a non-cash expense and includes depreciation on the new equipment. The company plans to purchase new equipment costing $80,000 in September. The company declared a $50,000 dividend in June that is payable in July.
The following is the company’s
ASSETS
Cash $ 100,000
Accounts receivable (from May & June sales) 1,500,000
Inventory 250,000
Prepaid rent 20,000
Fixed assets (net of deprecia0on) 860,000
TOTAL ASSETS $2,730,000
LIABILITIES & SHAREHOLDERS’ EQUITY
Accounts payable $ 388,000
Dividends payable 50,000
Common shares 940,000
Retained earnings 1,352,000
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY $2,730,000
The company is required to maintain a minimum cash balance of $100,000 at the end of each month. All borrowing on the company’s line of credit is done at the beginning of each month and repayments are made at the end of the month and borrowing must be done in increments of $1,000. The interest rate on the line of credit is 1% per month and must be paid at the end of each month based on the loan outstanding for that month.
How would you produce a
Thank youuu
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