a Using the information provided, construct a monthly cash budget for October th

Question

a Using the information provided, construct a monthly cash budget for October through December 2014. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing? b Construct a pro forma income statement for the first fiscal quarter of 2015 and a pro forma balance sheet as of December 31, 2014. What is your estimated external financing needed for December 31? c Does the December 31, 2014, estimated external financing equal your cash surplus (deficit) for this date from your cash budget? d Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2014. Noble Selected Information and Financial Statements Sales (20 percent for cash, the rest on 30-day credit terms): 2014 Actual 2014 Projected July August September October November December 76,000 88,000 266,000 125,000 51,000 53,000 Purchases (all on 60-day terms): 2014 Actual 2014 Projected July August September October November December 116,000 122,000 257,000 62,000 27,000 26,000 Salaries payable monthly 20,000 Principal payment on debt due in December 25,700 Interest due in December 9,000 Dividend payable in December 15,000 Taxes payable in November 19,000 Addition to accumulated depreciation in December 4,000 Cash balance on October 1, 2014 34,000 Minimum desired cash balance 15,000 Noble’s annual income statement and balance sheet for September 30, 2014 appear below.   Additional information about the company's accounting methods and expectations for the last three months of 2014 appear in the footnotes. Noble Annual Income Statement Fiscal Year ended September 30, 2014 ($ 000) Net sales 1,581.6 Cost of goods sold1 1,098.0 Gross profits 483.6 Selling and administrative expenses2 240.0 Interest expense 18.0 Depreciation3 16.0 Net profit before tax 209.6 Tax at 33% 69.2 Net profit after tax 140.4 Noble Balance Sheet September 30, 2014 ($ 000) Assets Cash 34.0 Accounts receivable 212.8 Inventory 425.0 Total current assets 671.8 Gross fixed assets 135.0 Accumulated depreciation 52.0 Net fixed assets 83.0 Total assets 754.8 Liabilities Bank loan 0.0 Accounts payable 379.0 Accrued expenses4 55.0 Current portion long-term debt5 25.7 Taxes payable 56.0 Total current liabilities 515.7 Long-term debt 120.0 Shareholders' equity 119.1 Total liabilities and equity 754.8 1. Cost of goods sold consists entirely of items purchased during the quarter. 2. Selling and administrative expenses consist entirely of salaries. 3. Depreciation is straight-line at the rate of $4,000 per quarter. 4. Accrued expenses are not expected to change in the last quarter. 5. $25.7 due December 2014. No payments for remainder of year. a Using the information provided, construct a monthly cash budget for October through December 2014. Based on your analysis, will Noble enjoy a surfeit of cash, or require external financing? b Construct a pro forma income statement for the first fiscal quarter of 2015 and a pro forma balance sheet as of December 31, 2014. What is your estimated external financing needed for December 31? c Does the December 31, 2014, estimated external financing equal your cash surplus (deficit) for this date from your cash budget? d Based on your answers above, construct a cash flow forecast for Noble for the period October through December 2014. Noble Selected Information and Financial Statements Sales (20 percent for cash, the rest on 30-day credit terms): 2014 Actual 2014 Projected July August September October November December 76,000 88,000 266,000 125,000 51,000 53,000 Purchases (all on 60-day terms): 2014 Actual 2014 Projected July August September October November December 116,000 122,000 257,000 62,000 27,000 26,000 Salaries payable monthly 20,000 Principal payment on debt due in December 25,700 Interest due in December 9,000 Dividend payable in December 15,000 Taxes payable in November 19,000 Addition to accumulated depreciation in December 4,000 Cash balance on October 1, 2014 34,000 Minimum desired cash balance 15,000 Noble’s annual income statement and balance sheet for September 30, 2014 appear below.   Additional information about the company's accounting methods and expectations for the last three months of 2014 appear in the footnotes. Noble Annual Income Statement Fiscal Year ended September 30, 2014 ($ 000) Net sales 1,581.6 Cost of goods sold1 1,098.0 Gross profits 483.6 Selling and administrative expenses2 240.0 Interest expense 18.0 Depreciation3 16.0 Net profit before tax 209.6 Tax at 33% 69.2 Net profit after tax 140.4 Noble Balance Sheet September 30, 2014 ($ 000) Assets Cash 34.0 Accounts receivable 212.8 Inventory 425.0 Total current assets 671.8 Gross fixed assets 135.0 Accumulated depreciation 52.0 Net fixed assets 83.0 Total assets 754.8 Liabilities Bank loan 0.0 Accounts payable 379.0 Accrued expenses4 55.0 Current portion long-term debt5 25.7 Taxes payable 56.0 Total current liabilities 515.7 Long-term debt 120.0 Shareholders' equity 119.1 Total liabilities and equity 754.8 1. Cost of goods sold consists entirely of items purchased during the quarter. 2. Selling and administrative expenses consist entirely of salaries. 3. Depreciation is straight-line at the rate of $4,000 per quarter. 4. Accrued expenses are not expected to change in the last quarter. 5. $25.7 due December 2014. No payments for remainder of year.

Explanation / Answer

October 2014 (Amount in $) November 2014 (Amount in $) December 2014 (Amount in $) Opening Cash Balance 34000 129800 15000 Expected Cash Receipts: Cash Sales 25000 10200 10600 Collection of accounts receivable 212800 100000 40800 Other income 0 0 0 Total cash collected 271800 240000 66400 Expected cash payments: Purchase 122000 257000 62000 Salaries 20000 20000 20000 Principal Repayment 0 0 25700 Interest Due 0 0 9000 Dividend Payable 0 0 15000 Taxes Payable 0 19000 0 Other payments 0 0 0 Total cash expenses 142000 296000 131700 Cash surplus (or deficit) 129800 -56000 -65300 Minimum Desired Cash Balance 15000 15000 15000 External Financing 0 71000 80300 Cash Balance Ending 129800 15000 15000 a) Based on the figures given Noble will require external financing. b) Based on the figures given Noble will require external financing of $80300.00 in December 2014. c) The Estimated external financing for December 2014 is greater than cash deficit amount since minimum cash balance of $15000.00 needs to be maintained. Thus external financing in December 2014 is $80300.00. Noble Quarterly Income Statement Quarter ended December 31, 2014 ($ 000) Net sales 229.00 Cost of goods sold1 115.00 Gross profits 114.00 Selling and administrative expenses2 60 Interest expense 4.5 Depreciation3 4 Net profit before tax 45.50 Tax at 33% 15.015 Net profit after tax 30.49 Noble Balance Sheet December 31, 2014 ($ 000) Assets Cash 15 Accounts receivable 42.4 Inventory 403 Total current assets 460.4 Gross fixed assets 135 Accumulated depreciation 56 Net fixed assets 79 Total assets 539.4 Liabilities Bank loan 151.3 Accounts payable 46 Accrued expenses4 35.5 Current portion long-term debt5 0 Taxes payable 52.01 Total current liabilities 284.81 Long-term debt 120 Shareholders' equity 134.59 Total liabilities and equity 539.40

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

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