in the to get and assumptions ase Probien 3: chapter 6 K\'S BOARD SHOP s Board S
ID: 2332334 • Letter: I
Question
in the to get and assumptions ase Probien 3: chapter 6 K'S BOARD SHOP s Board Shop is contemplating several alternative means o ition of $350,000 in w Sndget broken down by year 300,000 from a local ban new equipment in year 1, One option is to bor- equi The bank has asked them to produce a 3-year to increase 3 percent each year. Year I begin- sles of 40 percent and a required ending inven- k. $300,000 and are cx year (Year 1, 2, and 3). Sales in the prior year were sash was $97.450 and beginning are nventory was $30,000. Purchases hased on an expected cost of s B of 25 percent of next year's sales. Prior year expenses ina included advertising 2.500, depreciation expense expense of $2.500, de of $1,000, wages expense of $46,000 supp depre lies expense of $450, and utilities expense of $1.600. All expenses exce ciation are paid in the year in which they are incurred and are expected to is expe 8 percent each year. Interest expense is expected o de are $15,000 each year for years 1-3. Collections in the year of sale are expected to at increase 8Explanation / Answer
Assumptions
Snick's Board Shop Cash Budget Prior year 1 2 3 Operating Activities Operating cash receipt Product sale revenue 3000000 3,09,000 318270 327818 Collection in the year of sales 278100 286443 295036 Collection in the year of following sales 30000 30900 31827 Operating cash receipt 290000 308100 317343 326863 Operating cash payment Purchase Cost of sales 123600 127308 131127 Required ending inventory 31827 32782 33765 Beginning inventory (30000) (31827) (32782) Purchases 150000 125427 128263 132111 Payment in the year of purchase 119156 121850 125505 Payment in the year of following purchase 7500 6271 6413 Cash payment for purchase 152000 126656 128121 131918 Expenses Advt expenses 2500 2700 2916 3149 Interest expenses - 15000 15000 15000 wages expenses 56000 60480 65318 70544 Supplies expenses 450 486 525 567 Utilities expenses 1600 1728 1866 2016 Expenses 60550 80394 85626 91276 Operating cash payment 212550 207050 213747 223194 cash from (to) operating activities 77450 101050 103596 103669 Investing activities Equipment purchase (350000) (1000) (1000) Equipment sales 200 200 200 Cash from (to) investing activities (349800) (800) (800) Financing activites Loan proceeds 300000 Loan payment (110000) (110000) (110000) Cash from (to) financing activities 190000 110000 110000 Change in cash 77450 (58750) (7204) (7131) Beginning cash 20000 97450 38700 31497 Ending cash 97450 38700 31497 24366Related Questions
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