Finish filling in the Cash Budget Worksheet for Spring Valley.

 

You'll need this following information to complete:

Depreciation charges amounted to $3,000 per month, as did miscellaneous cash expenses. On the horizon, however, was a special outlay for pollution control equipment that would be necessitated by new regulations soon to be imposed by the Wabash Valley Watershed Authority on emissions from sawmill operations. These would call for the installation of a woodchip recycling facility costing $80,000 in mid‑November. Terms from the supplier were net, 30 days. Depreciation on the equipment would come to approximately $2,000 per month, starting with November. In December, the company planned to retire from its books a fully depreciated de‑barking crib which had originally cost $30,000, and which was no longer used in the firm's operations. As matter of policy, Mr. Firr felt that SPRIVORPCO should maintain a minimum cash balance of $50,000 in its account for normal transactions needs. His brother, Douglas, who was the loan officer at Tippecanoe Trust Company (TIPTCO), indicated that this sum would satisfy the bank's desires for compensating balances. A cash dividend of $20,000 to common stockholders was contemplated for December. Mr. Firr hoped to be able to make the payment, since he regarded it as valuable "seed money" for attracting possible new equity capital to the business in the future. On the basis of operating results for the first six months of 2002, a charge of 75 percent of sales as cost of goods sold seemed appropriate for the second half of the year in drawing up any pro forma income statements.  Traditionally, cost of goods sold for SPRIVORPCO encompassed only timber purchases and labor costs. Other expenses, like those for sales and administration, were separated out in the financial statements.

 

Attached is a partly completed excel document. I"ll also provide the word document with more details that includes the above information.

Attachments:

• 1502977614-Spring Valley.docx
• 1502977617-SpringValleyWorksheet Assignment.xlsx