ACCT 116 Budget Assignment
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ACCT 116 Budget Assignment – 50 Points Due November 10th-- AT THE BEGINNING OF CLASS 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
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Posted 19 Dec 2017 06:12 AM
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