Problem 5-35 (Part Level Submission) GrowMaster Products, a rapidly growing dist

Question

Problem 5-35 (Part Level Submission)

GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast.

Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information.

a. Prepare the cash receipts budget for the second quarter.

b. Prepare the purchases budget for the second quarter.
c. Prepare the cash payments budget for the second quarter.
d. Prepare the cash budget for the secondquarter.

Month Sales Month Sales January $903,300 July $1,502,500 February $1,004,000 August $1,502,500 March $903,300 September $1,603,600 April $1,157,400 October $1,603,600 May $1,253,200 November $1,502,500 June $1,408,300 December $1,706,600

Explanation / Answer

Sales Budget: apr may jun total july Sales-$ 1157400 1253200 1408300 3818900 1502500 after june Cash Receipts Budget: from february 2016 sales 401600 0 0 401600 from march 2016 sales 541980 361320 0 903300 from april 2016 sales 0 694440 462960 1157400 from may 2016 sales 0 0 751920 751920 501280 from june 2016 sales 0 0 0 0 1408300 943580 1055760 1214880 3214220 1909580 Cost of goods sold (40% of sales) 462960 501280 563320 1527560 601000 Purchase Budget: Purchases made during the month: 30% of current months sale 138888 150384 168996 70% of next months sale 350896 394324 420700 489784 544708 589696 1624188 Purchases disbursement budget: 75% of current month purchases 367338 408531 442272 25% of previoius month purchases 108117 122446 136177 total disbursements 475455 530977 578449 1584881 (Purchases of March   =   903300*.4*.3 + .7*462960    = 432468 ) Cash budget: Beginning balance of cash 58100 50552 50062 58100 Receipts: receipts from customers 943580 1055760 1214880 3214220 943580 1055760 1214880 3214220 Total cash available 1001680 1106312 1264942 3272320 Disbursements: against purchases 475455 530977 578449 1584881 wages and fringe benefits 347220 375960 422490 1145670 salaries and fringe benefits 27000 27000 27000 81000 advertising 30983 30983 30983 92949 property taxes 0 0 35000 35000 utilities 15075 15075 15075 45225 insurance 16075 16075 16075 48225 taxes 130320 0 0 130320 Total disbursements 1042128 996070 1125072 3163270 surplus/deficit -40448 110242 139870 109050 Financing: borrowing 91000 0 0 91000 repayment 0 -59000 -32000 -91000 payment of interest 0 -1180 -960 -2140 Total financing 91000 -60180 -32960 -2140 Ending balance of cash 50552 50062 106910 106910

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