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TAKE HOME PROBLEM - FALL 2020 DUE MONDAY, NOV 16 Gardens Sales. In December 11, 2017 $ 25300 5 5 Cash Accounts Receivable Inventory Prepaid Rent 50,000 Account Payable Working Capital une Note Payable 5 5 5 5 112_500 61,00 12 000 5 s 200.000 761,100 Common Stock Retained tamnings Prop. Plant & Equin Accum Den 5 5 Net PPRES 900 000 (100 000 300,000 5 1,036,500 5 Total Assets L035.300 You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and carings budget/forecast and Pro-Forma Balance Sheet and Income Statement for the next quarter. After your discussion with the various departments, you have come up with the following information/assumptions: . . . . . . . . November 2017 and December 2017 sales were $100,000, each month Sales for the following three months will increase by $5,000 each month, beginning January through April Cost of sales represents 60% of sales, each month Cash Operating Expenses are 10% of sales, exclusive of Depreciation expense Depreciation Expense is $8,000, per month and prepaid rent is amortized at $1,000 per month of the month's sales, 25% is collected as cash with the remaining placed on customer's account. Customer's accounts are usually paid off over a 2 month period (50% each month) beginning the month following the sale The CFO just informed you that one customer has filed bankruptcy therefore, $20,000 from Nov A/R Sales will be written off in Jan to Bad Debt Exp. The company purchases 100% of the next month's cost of sales. They pay for 60%, in cash, in the month they purchase and pay the remaining 40% in the following month. In March, the company is planning on replacing an outdated machine. The new machine will cost $25,000. The old machine originally cost $10,000, with a Net Book Value of $2,000 and will be sold for $1,000 The Company does not pay or accrue for taxes until the end of December The Company plans to pay a cash dividend of $7,500 at the end of March Assume all operating expenses incurred during the month are paid, in cash, during the same month incurred The Note Payable requires a principal payment of $22,000, plus interest of $1.500, at the end of March. For this note, no interest is Accrual/Expense until interest is paid The minimum cash month end balance required according to the bank agreement is $65,000 for any given month beginning Jan 30, 2018 A working capital line of credit is available, up to $100,000, and I needed, money is taken out at the beginning of the month. Interest is 1% per month Interest is paid on the working capital line when principal payments are paid on the debt; at the end of any given month Interest is accrued on the working capital line effective the beginning of the month when money is received, 1. Prepare a detailed Cash Budget Forecast for each month of Jan, Feb and March, 2018 2. Prepare an Income Statement for the 3-month period ending March 2018 (good form) 3. Prepare a Balance Sheet as of March 31, 2018 (good form) 4. Assignment must be tumed in as HAND WRITTEN document Cheek Figures for 03/31 Net Income: (mo) $51,203.19 Total Assets: $1,071,300.00 . . . . . TAKE HOME PROBLEM - FALL 2020 DUE MONDAY, NOV 16 Gardens Sales. In December 11, 2017 $ 25300 5 5 Cash Accounts Receivable Inventory Prepaid Rent 50,000 Account Payable Working Capital une Note Payable 5 5 5 5 112_500 61,00 12 000 5 s 200.000 761,100 Common Stock Retained tamnings Prop. Plant & Equin Accum Den 5 5 Net PPRES 900 000 (100 000 300,000 5 1,036,500 5 Total Assets L035.300 You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and carings budget/forecast and Pro-Forma Balance Sheet and Income Statement for the next quarter. After your discussion with the various departments, you have come up with the following information/assumptions: . . . . . . . . November 2017 and December 2017 sales were $100,000, each month Sales for the following three months will increase by $5,000 each month, beginning January through April Cost of sales represents 60% of sales, each month Cash Operating Expenses are 10% of sales, exclusive of Depreciation expense Depreciation Expense is $8,000, per month and prepaid rent is amortized at $1,000 per month of the month's sales, 25% is collected as cash with the remaining placed on customer's account. Customer's accounts are usually paid off over a 2 month period (50% each month) beginning the month following the sale The CFO just informed you that one customer has filed bankruptcy therefore, $20,000 from Nov A/R Sales will be written off in Jan to Bad Debt Exp. The company purchases 100% of the next month's cost of sales. They pay for 60%, in cash, in the month they purchase and pay the remaining 40% in the following month. In March, the company is planning on replacing an outdated machine. The new machine will cost $25,000. The old machine originally cost $10,000, with a Net Book Value of $2,000 and will be sold for $1,000 The Company does not pay or accrue for taxes until the end of December The Company plans to pay a cash dividend of $7,500 at the end of March Assume all operating expenses incurred during the month are paid, in cash, during the same month incurred The Note Payable requires a principal payment of $22,000, plus interest of $1.500, at the end of March. For this note, no interest is Accrual/Expense until interest is paid The minimum cash month end balance required according to the bank agreement is $65,000 for any given month beginning Jan 30, 2018 A working capital line of credit is available, up to $100,000, and I needed, money is taken out at the beginning of the month. Interest is 1% per month Interest is paid on the working capital line when principal payments are paid on the debt; at the end of any given month Interest is accrued on the working capital line effective the beginning of the month when money is received, 1. Prepare a detailed Cash Budget Forecast for each month of Jan, Feb and March, 2018 2. Prepare an Income Statement for the 3-month period ending March 2018 (good form) 3. Prepare a Balance Sheet as of March 31, 2018 (good form) 4. Assignment must be tumed in as HAND WRITTEN document Cheek Figures for 03/31 Net Income: (mo) $51,203.19 Total Assets: $1,071,300.00

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