Question

Required information Problem 13-63 & Problem 13-64 (Algo) (LO 13-5, 6,7,9) [The following information applies to the questions displayed below.) Jeremy Slacker started the Del Fuego Surf Shop on January 1 after determining that business school classes conflicted with his preferred activity. He invested $88,000 in the shop-$104,820 of his own savings and $44,000 borrowed from an acquaintance. The loan is to be repaid in 5 years. Jeremy will pay the lender annual interest at a rate of 8 percent. Shortly after opening, Jeremy realized that he is not the best financial planner and has come to you for help. With some prodding, you are able to establish that Jeremy plans to sell only two models of surfboard, the Zuma and the Coronado, for at least the first year. Data on the boards are given as follows. Coronado Expected annual sales (units) 1.392 696 Retail price (per unit) Purchase cost (per unit) 540 SO Additional Information on the planned operations for the year includes the following 1. Equipment costing $78,000 was purchased for cash when the store opened. The equipment will be depreciated over five years using straight-line depreciation. 2. Because of the fantastic weather in Del Fuego, Jeremy expects sales to occur uniformly over the year. Sales will be both for cash (60 percent) and on account (40 percent). Sales on account are assumed to be collected in two months. 3. Jeremy will maintain Inventory equal to one-half of a month's sales. All boards will be purchased from the manufacturer on credit with payment made one month after purchase. 4. Annual cash selling, general, and administrative expenses are $12.368 fixed plus 10 percent of revenues 5. Jeremy's tax rate is 40 percent.

there are 4 pictures with all the information provided to answer tbis question.

Answer 1

Del Fuego Surf Shop
Budgeted Income Statement
Particulars	Zuma	Coronado	Total
Sales	7,51,680	5,84,640	13,36,320
	(1392 x 540)	(696 x 840)
Closing Stock in units	174	87
	(1392/12*1.5)	(696/12*1.5)
Closing stock at cost	78,300	51,330	1,29,630
Purchases	7,04,700	4,61,970	11,66,670
	(1392+174)*450	(696+87)*590
Cost of Goods Sold	6,26,400	4,10,640	10,37,040
Gross Profit	1,25,280	1,74,000	2,99,280
Less:Expenses
Depreciation on Equipments			15,600	(78000/5)
Fixed selling, general and admin exps			12,368
Variable selling, general and admin exps			1,33,632	(10% of 1336320)
Interest on Loan			3,520	(8% of 44000)
Total Expenses			1,65,120
Profit before tax			1,34,160
Taxes@40%			53,664
Profit after Taxes transferred to reserve			80,496

Budgeted Balance Sheet
Assets	Amount	Amount
Fixed assets
Equipments	78,000
Less: Depriciation	15,600	62,400
Current Assets
Receivables	89,088		(1336320 * 40% * 2 /12 )
Inventory	1,29,630
Cash in hand	36,621	2,55,339	(Balancing figure of assets and liabilities)
Total Assets		3,17,739
Liabilities and Net worth	Amount	Amount
Liabilities
Loan payable	35,200		(44000/5*4)
Account Payables	97,223	1,32,423	(1166670/ 12 * 1) as one months purchase is in credit
Networth
Capital	1,04,820
Add: Profit for the year	80,496	1,85,316
Total Liabilities and Net Worth		3,17,739