The following data is available regarding Computer Superstores, Inc Cash 29000 4

Question

The following data is available regarding Computer Superstores, Inc Cash 29000 420000 369000 168000 Inventory Accounts Receivable Net Furniture and Fixtures Total Assets Accounts Payable Owiers' Equity Total Liablities and Owners' Equity 475000 511000 $986,000 Projected Sales $300,000 $350,000 $700,000 Ma August September $400,000 Additional Information: Sales are 10% cash and 90% credit sales. Credit sales are collected 80% in the match following the second month lollowing the sakc. The balance in Accounts Receivable on May 31 is the result of the credit sales for April and May as follows 1. the sl and 20% in 2· Outstanding from April Sales Outstanding from May Sales 54,000 Cost of Goods Sold is 60% of Sales. 4. The inventory policy is to acquire enough inventory cach month equal to the folloting month's projected sales. All 5 Salanes wages and Commissions represent 20% of sales; all other variable expenses are 4% ofsales 6. Fixed Expenses like rent, property taxes, and other miscellaneous payroll and other items are $55,000 monthly. purchases are paid for in the month following the purchase. Fisedl Assume that these variable and fixed expenses require cash disbursements each month. Depreciation is $2,500 monthly. exp . In June, $55,000 is going to be disbursed for fixtures acquired in May. This amount is included in the May 31 Accounts payable. Assume that a minimum cash balance of $25,000 is to be maintained.

Explanation / Answer

1 Sales budget June July August Quarter Sales 700000 400000 400000 1500000 Cash sales 70000 40000 40000 150000 Cash budget June July August Quarter Credit sales 630000 360000 360000 1350000 Beginning cash balance 29,000 25,000 25,467 29,000 2 Budgeted Cash receipt June July August Quarter Add Cash collections 376000 607000 454000 1437000 Cash sales 70000 40000 40000 150000 0 Total collections 4,05,000 6,32,000 4,79,467 14,66,000 April Sales 54000 54000 Less Cash disbursements May sales 252000 63000 315000 Payment of material 420000 240000 240000 900000 June sales 504000 126000 630000 Salaries , wages and comm 140000 80000 80000 300000 July sales 288000 288000 Other variable expense 28000 16000 16000 60000 Total collection 376000 607000 454000 1437000 Fixed expense 55000 55000 55000 165000 3 Purchase budget June July August Quarter Furniture and fixture 55000 55000 Cost of goods sold 420000 240000 240000 Total payments 698000 391000 391000 1480000 Add Ending inventory 240000 240000 180000 cash balance -2,93,000 2,41,000 88,467 -14,000 Total 660000 480000 420000 Financing Less Beginning inventory 420000 240000 240000 Loan taken 318000 318000 Required purchase 240000 240000 180000 Loan repaid 212000 61000 273000 4 Particulars June July August Quarter Interest paid 3533 1525 5058 Ending cash balance 25,000 25,467 25,942 25,942 Accounts payable 420000 420000 Payment for June 240000 240000 Payment for july 240000 240000 Payment for June 0 Total payments 420000 240000 240000 900000

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