2. A cash budget by month and in total. ( Also, see the bottom of this page
CASH BUDGET borrowing and repayments – Hints
)
6da1cf20_LT_Project_Cash_Budget_1 Video 6 10 minutes
This the first of three videos that show you how to complete Scenario 1 requirement: 2. A cash budget by month and in total.
https://www.3cmediasolutions.org/privid/228420?key=32ae046c31d8bc5f1cbda03e17620034eefd3897Links to an external site.
7da1cf20_LT_Project_Cash_Budget_2 Video 7 8 minutes
This the second of three videos that show you how to complete Scenario 1 requirement: 2. A cash budget by month and in total.
https://www.3cmediasolutions.org/privid/228447?key=ad50995eb65a41439872a6fd4c6dd1df44c970e6Links to an external site.
8da1cf20_LT_Project_Cash_Budget_3 Video 8 11 minutes
This the third of three videos that show you how to complete Scenario 1 requirement: 2. A cash budget by month and in total.
https://www.3cmediasolutions.org/privid/228750?key=e037e3118ef922abd071f509ee87ebfead1f60ebLinks to an external site.
3. A budgeted income statement for the three-month period ending June 30. Use the contribution margin approach.
9da1cf20_LT_Project_Inc_Stmt Video 9 13 minutes
This video shows you how to complete Scenario 1 requirement: 3. A budgeted income statement for the three-month period ending June 30. Use the contribution margin approach.
https://www.3cmediasolutions.org/privid/228571?key=d808542188c099bdf4e40fe2d115113b9b82ec04Links to an external site.
4. A budgeted balance sheet as of June 30.
10da1cf20_LT_Project_Bal_Sheet_1 Video 10 15 minutes
This the first of two videos that show you how to complete Scenario 1 requirement: 4. A budgeted balance sheet as of June 30.
https://www.3cmediasolutions.org/privid/228579?key=25b70ef186579b6597b2f18ab2a877e2c7e10f45Links to an external site.
11da1cf20_LT_Project_Bal_Sheet_2 Video 11 11 minutes
This the second of two videos that show you how to complete Scenario 1 requirement: 4. A budgeted balance sheet as of June 30.
https://www.3cmediasolutions.org/privid/228590?key=693f35a30dfc1b2190bd13f0ac243a9c9ceda573Links to an external site.
5. Calculate the Contribution Margin and Break-Even amounts (for the three month period) based on your assumptions about variable and fixed costs.
12da1cf20_LT_Project_CM_BEP Video 12 6 minutes
This video shows you how to complete Scenario 1 requirement: 5. Calculate the Contribution Margin and Break-Even amounts (for the three month period) based on your assumptions about variable and fixed costs.
https://www.3cmediasolutions.org/privid/228602?key=a64de9aeaaf0a8f1ee6933c8b1a8b89b82baca60Links to an external site.
SCENARIO 2 and project completion:
Repeat all the steps (1-5) in Scenario 1 assuming that the number of units expected to be sold increase by 20%. (i.e. 120% of the units expected to be sold in Scenario 1). The months January to March have already occurred so those will be the same for both Scenarios. IMPORTANT: Accounts receivable consists of amounts from February sales and amounts from March Sales. Use these numbers for both scenarios. Also, use the same March ending inventory number for both scenarios.
Additionally, Budgeted Ending Inventory for June is based on July sales. Therefore you will need to increase the expected July sales in Scenario 2 and this will mean June Ending Inventory will be different in Scenario 2.
13da1cf20_LT_Project_Scenario_2 Video 13 25 minutes
This video shows you how to complete ALL Scenario 2 requirements and how to prepare a pdf copy of your work to upload to the Canvas Milestone 2 Assignment.
https://www.3cmediasolutions.org/privid/228732?key=5f2fdceab3649ec626cc926afd76f518ab191e11Links to an external site.
***
CASH BUDGET borrowing and repayments – Hints
One area where many folks get stuck is in the borrowing and repayment section of the Cash Budget. Please review these Hints carefully, especially if you have any trouble at all in the Cash Budget.
Click this link for Hints regarding borrowing/repayment in the Cash Budget.Download Click this link for Hints regarding borrowing/repayment in the Cash Budget.
***SAMPLE COMPANY – Example
Here is an example for a similar company. This is just a partial example but it may be helpful to see a worked solution. NOTE: the minumum cash balance required in this sample is $20,000. That is probably different from the minimum cash balance in your individual problem.
The sample solution includes horizontal and vertical analysis which is not a requirement in this version of the project.
da1cf2020_sample_master_budget.pdf
Lai, Ngoc Phuc Tai Co.
Accounting 1C Long Term Project- Master Budget
You need to prepare a Master Budget for the Lai, Ngoc Phuc Tai Co..
The company has an exclusive right to sell SkyBlooms and sales have been brisk.
The Master Budget will be for the next three months starting April 1. The following information is
available related to the budget.
The company needs to maintain a minimum cash balance at the end of every
month in the amount of $15,000. The Blooms are forecasted to sell at $40 each.
Recent actual and projected sales (in units) are as follows
Actual
Jan
63,000
Feb
76,000
Mar
88,000
Projected
Apr
May
Jun
Projected
110,000
142,000
189,000
Jul
Aug
Sep
126,000
113,000
101,000
In order to meet the product demand, the company has established a policy
requiring that ending inventory for each month must be equal to 90% of the
units expected to sold in the next month. The cost to purchase each unit of product is $24.
Purchases are typically paid for as follows: 50% paid in the month of purchase,
and the remaining 50% paid in the month after purchase. All sales are on credit,
with no discount, and payable within 15 days. The company’s collections on
account usually are 25% in the month of sale, 50% in the month immediately
after the sale, and 25% in the second month after sale. The company has
a very rigorous credit policy and there are virtually no bad debts.
The company’s operating expenses are shown below:
Variable:
Sales Commissions
Fixed:
Wages
Utilities
Insurance expired
Depreciation
Miscellaneous
$4 per unit
$48,000
1,700
1,600
2,000
2,700
All operating expenses are paid during the month, in cash, with the exception
of depreciation and insurance expired. New fixed assets will be purchased
during May for $30,000. The company declares dividends of $16,000 each
quarter, payable in the first month of the following quarter.
Page 1
Lai, Ngoc Phuc Tai Co.’s Balance Sheet at March 31 is as follows.
ASSETS
Cash
$16,000
Accounts receivable*
3,400,000
Inventory (99000 units)**
2,376,000
Unexpired insurance
19,200
Fixed assets (net of depreciation)
193,600
Total Assets
$6,004,800
LIABILITIES AND EQUITY
Accounts payable (purchases)
Dividends payable
Capital stock, (no par)
Retained Earnings
Total Liabilities & Equity
$1,293,600
16,000
400,000
4,295,200
$6,004,800
*Accounts receivable consists of $760,000 from February sales
and $2,640,000 from March Sales. Use these numbers for both scenarios.
** Use this same March ending inventory number for both scenarios.
The company has a good relationship with its bank and can borrow money
at a 10% annual rate at any time and in any amount. All borrowing
and repayments must be made at the end of the month. When the company
is ready to make a payment, all unpaid interest must be paid first. After the
unpaid interest is paid, then principal can be repaid as long as the minimum
cash balance is maintained.
Page 2
Lai, Ngoc Phuc Tai Co.
Required:
You will complete all tasks listed below for the original facts above…this
will be Scenario 1. Then you will repeat the entire process for Scenario 2.
This second scenario will show what would happen if there was an increase of
20% (twenty percent) in the number of units sold. This is essentially a flexible budget.
SCENARIO 1 Prepare a Master Budget for the three month period ending June 30th. Include
the following detailed budgets:
1. a. A sales budget by month and in total.
b. A schedule of budgeted cash collections from sales and accounts
receivable by month and in total.
c. A purchases budget in units and dollars by month and in total.
d. A schedule of budgeted cash payments for purchases
by month and in total.
2. A cash budget by month and in total.
3. A budgeted income statement for the three-month period ending
June 30. Use the contribution margin approach.
4. A budgeted balance sheet as of June 30.
5. Calculate the Contribution Margin and Break-Even amounts (for the three month period)
based on your assumptions about variable and fixed costs.
SCENARIO 2 Repeat all the steps (1-5) shown above assuming that the number of units
expected to be sold increase by 20%. The months January to March have
already occurred so those will be the same for both Scenarios.
Please pay attention to the information above when it says:
*Accounts receivable consists of $760,000 from February sales
and $2,640,000 from March Sales. Use these numbers for both scenarios.
** Use this same March ending inventory number for both scenarios.
Budgeted Ending Inventory for June is based on July sales. Therefore
you will need to increase the expected July sales in Scenario 2 and
this will mean June Ending Inventory will be different in Scenario 2.
Here are some check figures to check your final work. If you agree with these check numbers
it is an important confirmation, although it is not guarantee that everything is correct.
Amounts for the quarter:
Scenario 1
Scenario 2
Sales budget
$17,640,000
$21,168,000
Budgeted cash collections
$13,950,000
$16,060,000
Budgeted purchases
$10,929,600
$13,590,720
Budgeted cash payments-purchases
$10,635,600
$12,979,200
Ending Cash Balance
$1,363,200
$768,460
Inc Stmt Interest Expense
$0
$8,340
Inc Stmt Net income
$5,124,000
$6,174,060
Bal Sheet AR
$7,090,000
$8,508,000
Bal Sheet Inventory
$2,721,600
$3,265,920
Bal Sheet AP
$1,587,600
$1,905,120
Bal Sheet Retained Earnings (RE)
$9,403,200
$10,453,260
Bal Sheet Total Assets (=Liab+OE)
$11,406,800
$12,774,380
Page 3
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
