IThe following information applies to the questions displayed below. \"We really

Question

IThe following information applies to the questions displayed below. "We really need to get this new material-handling equipment in operation just after the new year begins. I hope we can finance it largely with cash and marketable securties, but if necessary we can get a short-term loan down at MetroBank." This statement by Beth Davies-Lowry, president of Global Electronics Company concluded a meeting she had called with the firm's top management. Global is a small, rapidly growing wholesaler of consumer electronic products. The firm's main product lines are small kitchen appliances and power tools. Marclia Wilcox, Global Electronics' general manager of marketing, has recently completed a sales forecast. She believes the company's sales during the first quarter of 20x1 will Increase by 10 percent each month over the previous month's sales. Then Wilcox expects sales to remain constant for several months. Global's projected balance sheet as of December 31, 20x0 Is as follows: Cash Accounts recelvable Marketable securitles Inventory Buildings and equipment (net of accumulated depreclation)667,000 $50,000 224,000 20,000 154.000 Total assets $1,115,000 Accounts payable Bond Interest payable Property taxes payable Bonds payable (6%, due in 20x6) Common stock Retained earnings $205,800 9,000 2.400 360,000 450.000 87.800 Total lioblities and stockholders' equity $1.115,000

Explanation / Answer

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. 1. Sales Budget Jan Feb Mar Quarter Sale 440000 484000 532400 1456400 2. Purchase Budget Jan Feb Mar Quarter April Cost of Goods Sold 70% 308000 338800 372680 1019480 409948 Add: Desired Ending Inventory 169400 186340 204974 204974 Goods Available for Sale 477400 525140 577654 1224454 Less: beginning Inventory 154000 169400 186340 154000 Purchases 323400 355740 391314 1070454 3. Schedule for Collection from Customers Jan Feb Mar Quarter Receivable Accounts Receivable-Last Year 224000 224000 Cash Collection 30% 132000 145200 159720 436920 Jan 20% of 70% in same month 61600 246400 308000 Feb 67760 271040 338800 Mar 74536 74536 298144 Total Estimated Collection 417600 459360 505296 1382256 4. Schedule for cash payment for Pur Jan Feb Mar Quarter Payable Accounts Payable Last Year 205800 205800 Jan 97020 226380 323400 Feb 106722 249018 355740 Mar 117394.2 117394.2 273919.8 Total Estimated Payment 302820 333102 366412.2 1002334 5. Schedule for Month Expense Budget Jan Feb Mar Quarter Sales Commission 2% of Sale 8800 9680 10648 29128 Sales Salaries 28000 28000 28000 84000 Advertising and Promotions 16000 16000 16000 48000 Administrative Salaries 28000 28000 28000 84000 Depreciation 20000 20000 20000 60000 Interest on Bond 1800 1800 1800 5400 Property Taxes 600 600 600 1800 Total Budgeted Expenses 103200 104080 105048 312328 6. Cash Payment for Expenses Jan Feb Mar Quarter Sales Commission 8800 9680 10648 29128 Sales Salaries 28000 28000 28000 84000 Advertising and Promotions 16000 16000 16000 48000 Administrative Salaries 28000 28000 28000 84000 Depreciation Non Cash 0 0 0 0 Interest on Bond on 31st Jan for 6 Months 10800 10800 Property Taxes On Feb 28, for 6 Months 3600 3600 Cash Payment for Expenses 95200 81680 82648 259528 7. Cash Budget Jan Feb Mar Quarter Beginning Balance 50000 20580 65158 50000 add: Cash Collection 417600 459360 505296 1382256 Total Available Cash 467600 479940 570454 1432256 Cash Disbursment for: Purchases 302820 333102 366412.2 1002334 Expenses 95200 81680 82648 259528 Dividend 30000 30000 New Equipment 20000 being paid from marketable sec 100000 100000 Total Payment 498020 414782 479060.2 1391862 Surplus/(Deficit) -30420 65158 91393.8 40393.8 Borrowing 51000 51000 Interest 10%*Borrowing*Months/12 1275 1275 Repayment 51000 51000 Ending Cash Balance 20580 65158 39119 39119 8. Income Statement Sales 1456400 Less: Cost of Goods Sold 1019480 Gross Margin 436920 Less: Operating Expense Sales Commission 29128 Sales Salaries 84000 Advertising and Promotions 48000 Administrative Salaries 84000 Depreciation 60000 Property Taxes 1800 Net Operating Income 129992 Less:Interest on Bond 5400 Less: Interest on Short term loan 1275 Net Income 123317 9. Balance Sheet Cash 39119 Accounts Receivable 298144 Marketable Securities 0 Inventory 204974 Building and Equipment (net) 667000+120000-60000 727000 Total Assets 1269237 Accounts Payable 273920 Bond Interest payable 3600 Property Tax Payable 600 Bond Payable 360000 Common stock 450000 Retained Earning 87800+123317-30000 181117 Total Liabilities and Equity 1269237

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