So I finished this homework but I know that i got most of my answers wrong especially the cash budget. What am i doing wrong?

 

 

 

 

Kline Sisters Company operates a gift shop where peak sales and activity occur in the months of December and January. Data regarding the store's operations follow:

§ Sales are budgeted at $360,000 for January, 320,000 for February, and $250,000 for March and $240,000 in April.

§ Collections are expected to be 30% in the month of sale, 65% in the month following the sale, 3% in the second month following sale and 2% uncollectible.

§ The cost of goods sold is 76% of sales.

§ The company desires ending merchandise inventory to equal 13% of the following month's cost of goods sold. Payment for merchandise is made 50% in the month of purchase and 50% in the month following the purchase.

§ Monthly operating expenses to be paid in cash are $12,000.

§ Equipment purchases of $40,000 in February and $30,000 in March were paid in cash.

§ Monthly depreciation is $15,000.

§ Dividends of $40,000 were declared and paid in January.

§ Any borrowings must be in $1,000 increments at 12% annual interest. Assume interest accrues at the beginning of the month and is paid at the end of the month.

§ The company must maintain a minimum cash balance of $30,000.

§ Ignore income taxes.

§ All accounts receivable from December 31 will be collected in January and all accounts payable at December 31 will be paid in January.

§ The balance sheet as of December 31^st:

Kline Sisters Company

 

 

Balance Sheet

 

 

12/31/14

 

 

 

 

 

 

 

Assets:

 

 

 

Cash

 

 

$22,000

Net Accounts Receivable

 

$83,000

Merchandise Inventory

 

$36,000

Property Plant and Equipment

$1,600,000

 

  Less: accumulated depreciation

$588,000

$1,012,000

Total Assets

 

 

$1,153,000

 

 

 

 

Liabilities & Stockholder's Equity

 

Accounts Payable

 

$190,000

Common Stock

 

$350,000

Retained Earnings

 

$613,000

Total liabilities and stockholder's equity

 

$1,153,000

 

Prepare the following budgets for each month January, February, March and Total for the quarter in good form in excel with proper use of formulas and formatting:

 

a.   Prepare a Schedule of Expected Cash Collections

§ What is the budgeted accounts receivable at March 31^st ?

 

 

b.   Prepare a Merchandise Purchases Budget and a Schedule of Expected Cash Disbursements

§ What is the budgeted accounts payable at March 31^st ?

 

c.  Prepare a Cash Budget

§ How much does the company need to borrow for the quarter?

§ How much can the company repay for the quarter?

 

d.   Prepare a Budgeted Income Statement

 

 

 

Please highlight your answers.

Formatting is as important as the correct answer for this project. Your spreadsheet should be in good form, presented and printed clearly, and labeled appropriately. Your print out should be in report format and clearly presented. Each budget should not span more than one page, i.e. pay attention to what prints out on each page.

In addition to your spreadsheet, you MUST print out your spreadsheet formulas. Use “control ~” to toggle over to view the formulas and then print again. Projects submitted without formulas will only receive half credit.

 

Check figures: 

cash collections at end of quarter = $814,800

Deficiency in cash at the end of the quarter = $(99,206)

 

 

You will need to borrow and repay during the quarter.

Attachments:

• 1513504620-Managerial Homework.xlsx