Growmaster products, a rapidly growing distributor of home gardening equipment i
ID: 2513006 • Letter: G
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Growmaster products, a rapidly growing distributor of home gardening equipment is formulating its plans for the coming year. Carol Jones, The firms marketing director, has completed the following sales forecast. a edugen.wileyplus.com ?+ mmuter 2017 DX Wo Degree, Diploma & Certificate Progra... WileyPLUS BACK NEXT CES Problem 5-35 GrowMaster Products, a rapidly growing distributor of home year. Carol Jones, the firm's marketing director, has completed the following sales forecast. gardening equipment, is formulating its plans for the coming Month Sales Month Sales $900,000 July $1,500,000 $1,500,000 $900,000 September $1,600,000 $1,600,000 1,250,000 November $1,500,000 1,400,000 December $1,700,000 February $1,000,000 August March $1,150,000 October May June Philip Smith, projection, He has gathered the following information. an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow e All sales are made on credit in accounts receivable collection is expected to continue, with 60% of billings collected in the month after sale and the remaining 40% collected two months after the sale. cost of goods sold. GrowMaster's largest expense, is estimated to equal 40% of sales dollars seventy percent of inventory is purch ased one month prior to sale and 30% during the month of sale. For example, in Apri 30% of Apri cost of goods sold is purchased and 70% of May cost of goods sold is purchased. . All purchases are made on account. Historically 75% of accounts payable have been paid during the month of purchase, and the remaining 25% in the month following purchase. Hourly wages and fringe benefits, estimated at 30% of the current month's sales, are paid in the month incurred. . General and administrative expenses are projected to be $1,550,000 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installiments at the end of each quarter Salaries and fringe benefits 324,000 372,000 136,000 192,000 180,000 346,000 1,550,000 Property taxes Utilities Total Operating income for the first quarter of the coming year is projected to be $320.000. GrowMaster is subject to a 40% tax rate. The company pays 100% of its estimated taxes in the month following the end of each quarter. GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than $50,000 at the end of the month, the company borrows against its 12% line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $50,000. Your answer is incorrect. Try again. Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only, Leave other fields blank. Do not enter 0.) Cash Receipts BudgetExplanation / Answer
1. Cash Receipts Budget:
2. Purchases Budget:
3. Cash Payments Budget:
4. Cash Budget:
April May June Total Cash Receipts Collection of Sales of February 400,000 400,000 March 540,000 360,000 900,000 April 690,000 460,000 1,150,000 May 750,000 750,000 Totals $ 940,000 $ 1,050,000 $ 1,210,000 $ 3,200,000Related Questions
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