PROJECT A - Case 9-30

Student Name:

Muhammad Khan

D # 01632549

SALES BUDGET:
Budgeted unit sales
Selling price per unit
Total Sales

April
65,000
10
650,000

May
100,000
10
########

June
50,000
10
500,000

Quarter
215,000
10
########

SCHEDULE OF EXPECTED CASH COLLECTIONS:

April
May
February sales
26,000
March sales
280,000
40,000
April sales
130,000
450,000
May sales
200,000
June sales
Total Cash Collections
436,000
695,000

65,000
700,000
100,000
865,000

Quarter
26,000
320,000
650,000
900,000
100,000
########

MERCHANDISE PURCHASES BUDGET:

April
Budgeted unit sales
65,000
Add desired ending inventory
40,000
Total needs
105,000
Less beginning inventory
26,000
Required purchases
79,000
Cost of purchases @ $4 per unit
316,000

June
50,000
12,000
62,000
20,000
42,000
168,000

Quarter
215,000
12,000
227,000
26,000
201,000
804,000

May
100,000
20,000
120,000
40,000
80,000
320,000

June

BUDGETED CASH DISBURSEMENTS FOR MERCHANDISE PURCHASES:

April
May
June
Quarter
Accounts payable
100,000
100,000
April purchases
158,000
158,000
316,000
May purchases
160,000
160,000
320,000
June purchases
84,000
84,000
Total cash payments
258,000
318,000
244,000
820,000

EARRINGS UNLIMITED
CASH BUDGET
FOR THE THREE MONTHS ENDING JUNE 30
April
May
June
74,000
50,000
50,000
Cash balance
436,000
695,000
865,000
Add collections from customers
Total cash available
510,000
745,000
915,000
Less Disbursements
Merchandise purchases

258,000

318,000

244,000

Quarter
174,000
########
########

820,000

Advertising
Rent
Salaries
Commissions
Utilities
Equipment purchases
Dividends paid
Total Disbursements

200,000
18,000
106,000
26,000
7,000

Excess (deficiency) of receipts

over disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Cash balance, ending

200,000
18,000
106,000
40,000
7,000
16,000

200,000
18,000
106,000
20,000
7,000
40,000

15,000
630,000

705,000

635,000

600,000
54,000
318,000
86,000
21,000
56,000
15,000
########

#######

40,000

280,000

200,000

170,000

10,000

180,000
180,000
5,300
(5,300)
94,700

170,000

10,000

180,000
5,300
180,000

50,000

50,000

94,700

EARRINGS UNLIMITED
BUDGETED INCOME STATEMENT
FOR THE THREE MONTHS ENDED JUNE 30
########
Sales
Variable expenses:
Cost of goods sold
860,000
Commissions
86,000
946,000
Contribution Margin
########
Fixed expenses:
Advertising
600,000
Rent
54,000
Salaries
318,000
Utilities
21,000
Insurance
9,000
Depreciation
42,000 ########
Net operating income
160,000
Interest expense
5,300
Net income
154,700

EARRINGS UNLIMITED
BUDGETED BALANCE SHEET
JUNE 30
Assets:
Cash
Accounts receivable (see below)
Inventory
Prepaid insurance
Property and equipment, net

94,700
500,000
48,000
12,000
964,000

Total assets

########

Liabilities and Stockholders' Equity

Accounts payable, purchases
Dividends payable
Capital stock
Retained earnings (see below)
Total liabilities and stockholders' equity

84,000
15,000
800,000
719,700
########

Accounts receivable at June 30:

May sales x ?%
June sales x ?%
Total

100,000
400,000
500,000

Retained earnings at June 30:

Balance, March 31
Add net income
Total
Less dividends declared
Balance, June 30

580,000
154,700
734,700
15,000
719,700

Given Data Case 09-30:

EARRINGS UNLIMITED
Minimum ending cash balance
Selling price

$50,000
$10

Recent and forecast sales:

January (actual)
February (actual)
March (actual)
April
May
June
July
August
September

$
$
$
$
$
$
$
$
$

Desired ending inventories (percentage

of next month's sales)
Cost of earrings

20,000
26,000
40,000
65,000
100,000
50,000
30,000
28,000
25,000
40%

Purchases paid as follows:

In month of purchase
In following month

50%
50%

Collection on sales:
Sales collected current month
Sales collected following month
Sales collected 2nd month following

20%
70%
10%

Variable monthly expenses:

Sales commissions (% of sales)

4%

Fixed monthly expenses:

Advertising
Rent
Salaries
Utilities
Insurance (12 months paid in November)
Depreciation

$
$
$
$
$
$

200,000
18,000
106,000
7,000
3,000
14,000

Equipment purchased in May

Equipment purchased in June
Dividends declared each quarter

$
$
$

16,000
40,000
15,000

Balance sheet at March 31:

Assets
Cash
Accounts receivable
Inventory
Prepaid insurance

$74,000
346,000
104,000
21,000

Property and equipment (net)

Total assets

950,000
$1,495,000

Liabilities and Stockholders' Equity

Accounts payable
Dividends payable
Capital stock
Retained earnings
Total liabilities and stockholders' equity

$100,000
15,000
800,000
580,000
$1,495,000

Agreement with Bank:

Borrowing increments
Interest rate per month
Repayment increments
Total of interest paid each quarter
Required minimum cash balance

$1,000
1%
$1,000
100%
$50,000