Given the information that follows, prepare a cash budget for the XYZ Store for
ID: 2721245 • Letter: G
Question
Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2016. • All prices and costs remain constant. • Sales are 88% for credit and 12% for cash. • With respect to credit sales, 45% are collected in the month after the sale, 35% in the second month, and 20% in the third. Bad-debt losses are insignificant.
• Sales, actual and estimated, are (* for actual sales):
October 2015
$275,000*
March 2016
$340,000
November 2015
350,000*
April 2016
310,000
December 2015
320,000*
May 2016
375,000
January 2016
290,000
June 2016
280,000
February 2016
300,000
July 2016
370,000
Merchandises are purchased one month before the anticipated sales at 78% (COGS). Assume all purchases arrived in the same month of ordering, and the company will pay the purchase exactly 1 month after placing the order.
Wages and salaries are:
January 2016
$40,000
April 2016
$60,000
February 2016
45,000
May 2016
55,000
March 2016
50,000
June 2016
52,000
Rent is $5,000 a month.
Interest of $7,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned.
A tax prepayment of $50,000 for 2016 income is due in April.
A capital investment of $50,000 is planned in June, to be paid for then.
The company has a cash balance of $100,000 at December 31, 2015, which is the minimum desired level for cash. Funds can be borrowed in multiples of $10,000. (Ignore interest on such borrowings.)
part ( b)
Use the cash budget worked out in Part (a) and the following additional information to prepare a forecast income statement for the first half of 2016 for the XYZ Store. (Note that the store maintains a safety stock of inventory.) Inventory at 12/31/15 was $180,000.
Depreciation is taken on a straight-line basis on $240,000 of assets with an average remaining life of 10 years and no salvage value.
The tax rate is 35 percent.
Part (c)
Given the following information and that contained in Parts (a) and (b), construct a forecast balance sheet as of June 30, 2016, for the XYZ Store.
XYZ Store balance sheet at December 31, 2015
ASSETS LIABILITIES AND EQUITY
Cash
$100,000
Accounts payable $100,000
Accounts receivable
427,500
Bonds 500,000
Inventory
180,000
Common stock and retained earnings
Fixed assets, net
240,000
347,500
$947,500
$947,500
October 2015
$275,000*
March 2016
$340,000
November 2015
350,000*
April 2016
310,000
December 2015
320,000*
May 2016
375,000
January 2016
290,000
June 2016
280,000
February 2016
300,000
July 2016
370,000
Explanation / Answer
Answer:
Answer:b
Schedule of expected cash collections Particulars Jan Feb March April May June Credit sale 255200 264000 299200 272800 330000 246400 45% collected in the month after sales 126720 114840 118800 134640 122760 148500 35% in second month 107800 98560 89320 92400 104720 95480 20% in third 48400 61600 56320 51040 52800 59840 Total collections 282920 275000 264440 278080 280280 303820Related Questions
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