Sharp Family Company operates a snowboard shop where peak sales and activity occ

Question

Sharp Family Company operates a snowboard 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 $350,000 for January, 330,000 for February, and $275,000 for March and $250,000 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 quarter and is paid at the end of the quarter. • 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 31st: Sharp Family Company Balance Sheet 12/31/15 Assets: Cash $22,000 Net Accounts Receivable $95,000 Merchandise Inventory $36,000 Property Plant and Equipment $1,600,000 Less: accumulated depreciation $588,000 $1,012,000 Total Assets $1,165,000 Liabilities & Stockholder's Equity Accounts Payable $202,000 Common Stock $350,000 Retained Earnings $613,000 Total liabilities and stockholder's equity $1,165,000 Prepare the following budgets for each month of 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 31st ? b. Prepare a Merchandise Purchases Budget and a Schedule of Expected Cash Disbursements • What is the budgeted accounts payable at March 31st ? 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 Prepare a Budgeted Balance Sheet as of 3/31/16

Explanation / Answer

Answer:a

Answer: The  budgeted accounts receivable at March 31st is $ 209000

Answer:b

The budgeted accounts payable at March 31st is $103265

Answer:c

Borrow=194000

Repayment=54945

Answer:d

Schedule of expected cash collections Particulars jan Feb March Total Sales 350000 330000 275000 955000 30% collections in month of sales 105000 99000 82500 286500 65% collected in month following sale 95000 227500 214500 537000 3% collected in second month 10500 10500 Total collection from sale 200000 326500 307500 834000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.