PLEASE SHOW FORMULAS!!! All yellow boxes REQUIRE formulas.**** Required: You nee
ID: 2531733 • Letter: P
Question
PLEASE SHOW FORMULAS!!! All yellow boxes REQUIRE formulas.****
Required: You need to prepare a comprehensive 6-month budget, including supporting schedules and a report for the period January 1, 2010 to June 30, 2010 for Gray, Inc (a fictional company). This project must include:
Sales Forecast and Budget..........
Cash Receipts budget................
Purchase budget........................
Cash Purchases Disbursements budget.....
Operating Expense budget......
Summary Cash budget............
Budgeted Income Statement.....
Budgeted Balance Sheet............
Notes and Hints
1. All 8 parts must be submitted before I grade the project.
2. The schedules/budgets must be prepared on Excel. The templates I have prepared must be used as is.
3. Part of this project is demonstrating proper use of Excel. You may only input a “hard number” into a pink cell. All yellow cells must be formula based (no numbers included – use appropriate cell referencing).
4. I recommend constructing the formulas for one month and then copying the formulas over to the remaining months.
5. Rounding is encouraged and you may ignore interest and taxes.
INFORMATION FOR HENRON, INC. BUDGET PROJECT
1. Gray, Inc. is a company that re-sells one product, a particularly comfortable lawn chair. An overseas contractor makes the product exclusively for Gray, so Gray has no manufacturing-related costs.
2. As of 11/09, each lawn chair costs Gray $4 per unit. Gray sells each chair for $10 per unit.
3. The estimated sales (in units) are as follows:
Nov 09
11,250
Dec 09
11,600
Jan 10
10,000
Feb 10
11,400
Mar 10
12,000
Apr 10
15,600
May 10
18,000
June 10
22,000
July 10
18,000
4. Per an existing contract, the cost of each chair is scheduled to increase by 5% on March 1, 2010. In addition, because of increasing costs of plastic webbing, the cost is anticipated to increase by an additional 5% on May 1, 2010. To offset these increases, the company plans to raise the sales price to $11.25 per unit beginning May 1, 2010. The sales forecast (i.e., estimated sales in units) takes this price increase into account.
5. Thirty percent of any month’s sales are for cash, and the remaining 70% are on credit. Thirty percent of the credit sales are collected in the month of sale, 50% are collected in the following month, and 16% are collected in the second month after the sale. The remaining receivables are deemed uncollectible. Bad debts are written off in the month the debt is deemed uncollectible (e.g. if the sale is made in January and is not collected by the end of March, it is written off in March.) No accrual for estimated bad debts is made in the month of sale.
6. The firm’s policy regarding inventory is to stock (i.e. have in ending inventory) 40% of the forecasted demand in units (i.e., estimated sales) for the next month. Gray uses the first-in, first-out (FIFO) method in accounting for inventories.
7. Forty percent of the inventory purchases are paid for in the month of purchase and the remaining 60% are paid in the following month (i.e. all of the previous month’s Accounts Payable are paid off by the end of any month.)
8. Per a prior contract, a cash payment of $50,000 for equipment previously purchased is due in January. Another payment of $30,000 is due in February. Depreciation on the equipment previously purchased is included in the overhead cost detailed in item 11 below. Also, dividends of $12,000 are to be paid in March.
9. Monthly operating expenses consist of the following (if these are cash expenses, they are paid when incurred):
Salaries and Wages
$3,000
Sales Commissions
7% of sales revenue
Rent
$8,000
Other Variable Cash Expenses
6% of sales revenue
Supplies Expense: See note
$2,000
Other: See note
$48,000
Note: Other general and administrative overhead is expected to be $48,000 per month. Of this amount, $24,000 represents depreciation and other non-cash expenses. The company maintains on hand one month’s worth of supplies.
10. The company must maintain a minimum cash balance of $15,000. Borrowing can make up shortfalls. For simplicity, assume that the bank will only lend (and accept repayments) in $1,000 increments. Ignore interest on the loan in your calculations, but minimize the amount borrowed and pay off any loans as soon as possible.
11. Cash on hand as of December 31, 2009 is expected to be $15,000. In addition, there will be no notes payable as of this date.
12. See below the other Balance Sheet accounts with their expected balances as of December 31, 2009:
· Supplies..............................................$ 2,000
· Property, Plant and Equipment...........1,000,000
· Accumulated Depreciation................. 526,475
· Common Stock................................... 200,000
Nov 09
11,250
Dec 09
11,600
Jan 10
10,000
Feb 10
11,400
Mar 10
12,000
Apr 10
15,600
May 10
18,000
June 10
22,000
July 10
18,000
Gray, Inc Sales Budget For the 6 mos ending June '07 6 June '07 6 mos total 89,000 Nov '06 Dec '06 Feb '07 Mar '07 r '07 15,600 Jan D May 07 12,000 18,000 22,000 11.25 $ 11.25 10,000 8 Budged unit sales 9 Selling price per unit 10 Total Sales 11,250 11,600 11,400 10.00 $ 10.00 $ 10.00$10.00 $ 10.00 $10.00 $ 112,500 $ 116,000 100,000 $ 114,000 $ 120,000 $ 156,000 $202,500 S 247,500 S 940,000 12 Cash Sales % 13 Credit Sales % 15 Cash Sales 16 Credit Sales 17 Total Sales 33,750$ 78,750 34,800 $30,000$34,200 $36,000 $46,800$ 81 200 84,000 120,000 60,750 $ 74,250 350,550 817,950 156,000 202.500 S 247,500 $ 1,168,500 70,000 79,800 112.500116,000100,000 $114,000 109,200 141,750 173,250 20 Current month A/R Collections 21 1 month prior A/R Collections 22 2 months prior A/R Collections 23 Uncollectible 24 25 16% Gray, Inc Cash Collections For the 6 mos ending June 'O7 27 28 29 30 Current month cash Sales 31 Current month A/R Collections 32 1 month prior A/R Collections 3 2 months prior A/R Collections 34 Total cash collections 35 Feb '07 Mar '07 May '07 June '07 6 mos total r '07 46,800 32,760 54,600 17,472 Jan '07 30,000 21,000 35,000 11,200 350,550 51,975 245,385 86,625 $408,975 27,720 $ 130,872 97,200 $ 110,808 $ 116,640$151,632 $ 196,830 $ 240,570 $913,680 34,200 23,940 39,900 12,768 36,000 25,200 42,000 13,440 60,750 42,525 70,875 22.680 74,250Explanation / Answer
Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
This is very comprehensive problem. Tried to explain below. Still if some of the figures you cant make it out, ping me in comment, will revert with explanation
1. Sales Budget Nov Dec Jan Feb Mar Apr May Jun Total July Budgeted Unit Sale 11250 11600 10000 11400 12000 15600 18000 22000 89000 18000 Selling Price Per unit 10 10 10 10 10 10 11.25 11.25 10 Total Sale 112500 116000 100000 114000 120000 156000 202500 247500 940000 Cash Sale % 30% Credit Sale % 70% Nov Dec Jan Feb Mar Apr May Jun Total Cash Sale 33750 34800 30000 34200 36000 46800 60750 74250 282000 Credit Sale 78750 81200 70000 79800 84000 109200 141750 173250 658000 Total Sale 112500 116000 100000 114000 120000 156000 202500 247500 940000 Current Month AR Collection 30% 1 Month prior AR Collection 50% 2 Month prior AR Collection 16% Uncollectible 4% 2. Cash Receipt Budget Reveovable Jan Feb Mar Apr May Jun Total May June Total Current Month Cash Sale 30000 34200 36000 46800 60750 74250 282000 28350 121275 149625 Current Month AR Collection 30% of Same Month 21000 23940 25200 32760 42525 51975 197400 1 Month prior AR Collection 50% of Prior Month 40600 35000 39900 42000 54600 70875 282975 2 Month prior AR Collection 16% of 2 prior month 12600 12992 11200 12768 13440 17472 80472 Total Cash Collection 104200 106132 112300 134328 171315 214572 842847 Bad Debt Expense 3150 3248 2800 3192 3360 4368 26320 Desired Ending Inventory 40% 3. Purchase Budget Nov Dec Jan Feb Mar Apr May Jun Total July Budget unit sale 11250 11600 10000 11400 12000 15600 18000 22000 89000 18000 Add: Desired Ending inventory 4640 4000 4560 4800 6240 7200 8800 7200 7200 Total Needs 15890 15600 14560 16200 18240 22800 26800 29200 96200 Less: beginning inventory 4640 4000 4560 4800 6240 7200 8800 4000 Required Purchase 10960 10560 11640 13440 16560 19600 20400 92200 Cost Per unit 4 4 4 4.2 4.2 4.41 4.41 Purchases 43840 42240 46560 56448 69552 86436 89964 391200 % Paid in month of purchase 40% % Paid in month after purchase 60% 4. Cash Disbursment Jan Feb Mar Apr May Jun Total Payable Cash Purchase 16896 18624 22579 27821 34574 35986 156480 1 month prior AP collection 26304 25344 27936 33869 41731 51862 207046 53978 60% of June Pur Cash Disbursment for Merchandise Purchase 43200 43968 50515 61690 76306 87847 363526 5. Operating Expense Budget Jan Feb Mar Apr May Jun Total Salaries and wages 3000 3000 3000 3000 3000 3000 18000 Sales Commission 7% of Sale 7000 7980 8400 10920 14175 17325 65800 Rent 8000 8000 8000 8000 8000 8000 48000 Other Variable Cash Expense 6% of Sale 6000 6840 7200 9360 12150 14850 56400 Supplies Expense 2000 2000 2000 2000 2000 2000 12000 Other-Overhead 24000 24000 24000 24000 24000 24000 144000 Other-Depreciation 24000 24000 24000 24000 24000 24000 144000 Bad Debt Expense 3150 3248 2800 3192 3360 4368 20118 Total Operating Expense 77150 79068 79400 84472 90685 97543 508318 Depreciation and non cash items 24000 24000 24000 24000 24000 24000 144000 Bad Debt Expense 3150 3248 2800 3192 3360 4368 20118 Cash Disbursment for operating expense 50000 51820 52600 57280 63325 69175 344200 6. Cash Budget Jan Feb Mar Apr May Jun Total Cash Balance, beginning 15000 15000 15344 15529 15887 15572 15000 Add: Collection from customers 104200 106132 112300 134328 171315 214572 842847 Total Cash available 119200 121132 127644 149857 187202 230144 857847 Less: Disbursment for Cash Disbursment for Merchandise Purchase 43200 43968 50515 61690 76306 87847 363526 Cash Disbursment for operating expense 50000 51820 52600 57280 63325 69175 344200 Equipment Purchase 50000 30000 80000 Dividends 12000 12000 Total Cash Disbursments 143200 125788 115115 118970 139631 157022 799726 Excess of receipts over payment -24000 -4656 12529 30887 47572 73121 58121 Financing: Borrowing 39000 20000 3000 62000 Repayment -15000 -32000 -15000 -62000 Total Financing 39000 20000 3000 -15000 -32000 -15000 0 Cash Balance, ending 15000 15344 15529 15887 15572 58121 58121 7. Budgeted Income Statement Jan Feb Mar Apr May Jun Total Sales, Net 100000 114000 120000 156000 202500 247500 940000 Cost of Goods Sold Unit Sold* Cost per unit 40000 45600 49440 65520 77868 97020 375448 Gross Margin 60000 68400 70560 90480 124632 150480 564552 Total Operating Expense 77150 79068 79400 84472 90685 97543 508318 Net Income -17150 -10668 -8840 6008 33947 52937 56234 8. Budgeted Balance Sheet Assets: Current Assets: -Cash 58121 -Accounts Receivable 149625 -Supplies (Given in Que) 2000 -Merchandise Inventory 31752 241498 Plant and Equipment: -Building and Equipment 1000000 -Accumulated Depreciation 526475+144000 670475 329525 Total Assets 571023 Liability and Equity Accounts Payable 53978 Capital Stock 200000 Retained Earnings 272811-12000+56234 317045 517045 Total Liability and Equity 571023 0Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.