Q1 a.

Sales Budget

Sales on cash
Sales on credit
Total budgeted sales

January
100,000
300,000
400,000

February
110,000
330,000
440,000

March
121,000
363,000
484,000

b. Expected cash receipts

Sales on cash
100% previous month's A/R
Total expected cash receipts

January
100,000
100,000

February
110,000
300,000
410,000

March
121,000
330,000
451,000

c. Pro forma balance sheet & income statement

1) Accounts receivable on the March 31 pro forma balance sheet
Current Assets:
Account Receivable

363,000

2) Sales on the first quarter pro forma income statement

Sales

1,324,000
d. Inventory purchases budget

Budgeted sales
60% cost of good sold of sales
add: 25% of desired ending inventory
Total needs
less: beginning inventory
Total inventory purchases budget

January
400,000
240,000
66,000
306,000
0
306,000

February
440,000
264,000
72,600
336,600
66,000
270,600

March
484,000
290,400
78,500
368,900
72,600
296,300

e. Expected cash payment

January
January purchases
70% x 306,000
30% x 306,000
February purchases
70% x 270,600

February

214,200

189,420

March

30% x 270,600
March purchases
70% x 296,300
30% x 296,300
Total expected cash payment

91,800

214,200

281,220

207,410
81,180
288,590

f. Pro forma balance sheet & income statement

1) COGS on the first quarter pro forma income statement
794,400
Cost of Goods Sold
2) Ending inventory and accounts payable on the March 31 pro forma balance sheet
Current Assets:
78,500
Ending Inventory
Current Liabilities:
88,890
Account Payable
Q2. a Selling and administrative expenses
Equipment
Salvage value
Equipment lifespan

100,000
10,000
10 years
a. Selling & Administrative expenses

Variable expenses:
Sales commissions 5% of sales
Supplies expense 2% of sales
Fixed expenses:
Salary expenses
Utilities
Depreciation on Center Equipment
Rent
Miscellaneous
Total S & A expenses

January

February

March

20,000
8,000

22,000
8,800

24,200
9,680

24,000
1,400
750
3,600
900
58,650

24,000
1,400
750
3,600
900
61,450

24,000
1,400
750
3,600
900
64,530

b. Cash payment for S & A expenses

Sales commision
Supplies expenses
Salary expenses
Utilities
Rent
Miscellaneous
Total of cash payment for S & A expenses

0
8,000
24,000
0
3,600
900
36,500

20,000
8,800
24,000
1,400
3,600
900
58,700

22,000
9,680
24,000
1,400
3,600
900
61, 580

c. Cash budget
Desired cash balance not less than $12,000
Interest Line 1% and pricipal in increment in 1000
January

February

March

Cash Receipts
Beginning cash balance
Add Cash Recipts
Total Cash Available

0
100,000
100,000

12,300
410,000
422,300

12,750
451,000
463,750

Cash Payments
For Inventory Purchases
For S&A Expenses
For Interest Expenses
Purchasing Equipment
Total Budgeted Payments

214,200
36,500
0
100,000
350,700

281,220
58,700
2,630
0
342,550

288,590
61,580
1,960
0
352,170

Financing Activities
Surplus(Shortage)
Borrowing(Repayment)
Ending Cash Balance

(250700)
263,000
12,300

79,750
(67000)
12,750

111,580
(99000)
12,580

d & e. Income Statement end 31 March

Sales Revenue
COGS
Gross Margin
S & A Expenses
Operating Income
Interest Expenses
Net Income

1,324,000
-794,400
529,600
(184630)
344,970
(4590)
340,380
f. Proforma Balance Sheet

Assets :
Cash
Account Receivables
Inventory
Equipment
Depreciation on center equipment
Total Assets
Liabilities :

12,580
363,000
78,500
100,000
(2250)
551,830

Account payable
Sales comission of 5 %
Utility payables
Line of Credit Liability
Total Liabilities

88,890
24,200
1,400
97,000
211,490

Equity :
Retained earning
Total Liability and Equity

340,380
551,830

g. First Quarter Pro Forma Statement Cash Flows

Cash flow operating activities
Cash received
Cash payment for inventory
Cash for selling and administrative expense
Cash for interest expenses
Net cash flow operating activities
Cash flow investing activities
cash for equipment
Cash flow financing activities
Cash flow of borrowing (repayment)
Net change in cash
Plus beginning cash balance
Ending cash balance

961,000
(783,810)
(156,780)
(4,590)
15,820

(100,000)

97000
12,580
0
12,820

Pro Forma
363,000
1,324,000

Quarter
331,000
663,000
1,171,000

ment

Quarter
1,324,000
794,400
217,100
1,011,500
138,600
872,900

Quarter
214,200

189,420

Pro Forma
794,400
78,500

88,890

91,800
207,410
81,180
784,010

ment

es

Quarter
66,200
26,480
72,000
4,200
2,250
10,800
2,700
184,630

Pro Forma

961,000 (a)

783,810 (b)
156.780 (c)
4,590 (d)
100,000

97,000 (f)
12,580 (g)

h
Sales Budget
Purchase Budget
S&A Exp
Cash Budget