Given Data CRAVAT SALES COMPANY CRAVAT SALES COMPANY Minimum ending cash balance $ 10,000 Budgets Se
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Given Data
CRAVAT SALES COMPANY
CRAVAT SALES COMPANY
Minimum ending cash
balance
$ 10,000
Budgets
Selling price (per unit)
$ 8.10
April
May
June
Quarter
Recent and forecast sales
(in units):
1a.
Sales budget:
January (actual)
20,000
Budgeted
sales in units
33,000
41,000
65,000
139,000
February (actual)
24,000
Selling
price per unit
$ 8.10
$ 8.10
$ 8.10
$ 8.10
March (actual)
28,000
Total sales
$ 267,300
$ 332,100
$ 526,500
$ 1,125,900
April
33,000
Correct!
Correct!
Correct!
May
41,000
1b.
Schedule of expected cash collections:
June
65,000
February
sales
$ 19,440
$ 19,440
July
40,000
March sales
136,080
22,680
$ 158,760
August
36,000
April sales
80,190
160,380
$ 26,730
$ 267,300
September
32,000
May sales
99,630
199,260
$ 298,890
June sales
157,950
$
157,950
Desired ending
inventories (percentage
75%
Total
cash collections
$ 235,710
$ 282,690
$ 383,940
$ 902,340
of next month’s sales)
Correct!
Correct!
Correct!
Correct!
Cost of ties (per unit)
$ 4.85
1c.
Merchandise purchases budget:
Budgeted
sales in units
33,000
41,000
65,000
139,000
Purchases paid as
follows:
Add
budgeted ending inventory
30,750
48,750
30,000
30,000
In month of purchase
50%
Total needs
63,750
89,750
95,000
169,000
In following month
50%
Less
beginning inventory
24,750
30,750
48,750
24,750
Required
unit purchases
39,000
59,000
46,250
144,250
Collection on sales:
Unit cost
$ 4.85
$ 4.85
$ 4.85
$ 4.85
Sales collected current month
30%
Required
dollar purchases
$ 189,150.00
$ 286,150.00
$ 224,312.50
$ 699,612.50
Sales collected following month
60%
Correct!
Correct!
Correct!
Correct!
Sales collected 2nd month following
10%
1d.
Budgeted cash disbursements for inventory purchases:
March
purchases
$ 76,993.75
$ 76,994
Variable monthly
expenses:
April
purchases
94,575
$ 94,575
$ 189,150
Sales commissions (per tie)
$ 1.00
May
purchases
143,075
$ 143,075
$ 286,150
June
purchases
112,156.25
112,156.25
Fixed monthly expenses:
Total
cash payments
$ 171,568.75
$ 237,650
255,231.25
664,450.00
Wages and salaries
$ 22,000
Correct!
Correct!
Correct!
Correct!
Utilities
$ 14,000
Insurance
$ 1,200
2.
Depreciation
$ 1,500
CRAVAT SALES COMPANY
Miscellaneous
$ 3,000
Cash Budget
For the Three Months
Ending June 30
Land purchased in May
$ 30,000
Dividends declared each
quarter
$ 12,000
April
May
June
Quarter
Cash
balance, beginning
$ 14,000
$ 12,141.25
$ 12,181.25
$ 38,323
Balance sheet at March
31:
Add
receipts from customers
235,710
282,690
383,940
902,340
Assets
Total
cash available
249,710
294,831
396,121
940,663
Cash
$ 14,000
Less
disbursements:
Accounts receivable
Purchase of inventory
171,568.75
237,650.00
255,231.25
664,450
February sales
$ 19,440
Sales commissions
33,000
41,000
65,000
139,000
March sales
158,760
178,200
Salaries and wages
22,000
22,000
22,000
66,000
Inventory (24,750 units)
120,037.50
Utilities
14,000
14,000
14,000
42,000
Prepaid insurance
14,400
Miscellaneous
3,000
3,000
3,000
9,000
Fixed assets, net of
depreciation
172,700
Dividends paid
4,000
4,000
4,000
12,000
Total assets
$ 499,337.50
Land purchases
–
30,000
–
30,000
Total
disbursements
247,568.75
351,650.00
363,231.25
962,450
Liabilities and Stockholders’ Equity
Excess
(deficiency) of receipts
Accounts payable
$76,993.75
over disbursements
2,141.25
(56,818.75)
32,890.00
(21,788)
Dividends payable
12,000
Financing:
Capital stock
300,000
Borrowings
10,000
69,000
–
79,000
Retained earnings
110,343.75
Repayments
–
–
22,000
22,000
Total liabilities and
stockholders’ equity
$ 499,337.50
Interest
–
–
(1,680)
(1,680)
Total
financing
10,000
69,000
20,320
55,320
Agreement with Bank:
Cash
balance, ending
$ 12,141.25
$ 12,181.25
$ 12,570.00
$ 12,570
Borrowing increments
$ 1,000
Correct!
Correct!
Try again!
Try again!
Maximum borrowing amount
$300,000
Interest rate per month
1%
3.
Repayment increments
$ 1,000
CRAVAT SALES COMPANY
Total of interest paid
each quarter
100%
Budgeted Income
Statement
Required minimum cash
balance
$ 12,000
For the Three Months
Ended June 30
Sales
in units
139,000
Sales
$ 1,125,900
Variable
expenses:
Cost of goods sold
$ 699,613
Commissions
139,000
838,613
Contribution
margin
287,288
Fixed
expenses:
Salaries and wages
66,000
Utilities
42,000
Insurance expired
3,600
Depreciation
4,500
Miscellaneous
9,000
125,100
Net
operating income
162,188
Less
interest expense
(1,680)
Net income
$ 163,868
Try again!
4.
CRAVAT SALES COMPANY
Budgeted Balance
Sheet
June 30
Assets
Cash
Accounts
receivable
24,750
Inventory
30,000
Unexpired
insurance
Fixed
assets, net of depreciation
1,500
Total assets
Liabilities and
Stockholders’ Equity
Accounts
payable, purchases
$76,933.75
Dividends
payable
12,000
Loans
payable, bank
79,000
Capital
stock, no par
300,000
Retained
earnings
Total
liabilities and equity
Accounts
receivable at June 30:
May sales
$ 332,100
June sales
526,500
Total
Retained
earnings at June 30:
Balance, March 31
Add net income
Total
Less dividends declared
Balance, June 30
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