Question

Willow ng 1. Balance sheet og information is available for the Barkery, a gourmet pet food and toys stepe Ce sheet information as of September 30, 2019: $ 21,000 34.500 20,000 119,075 Current Assets Cash Accounts Receivable Inventory Equipment (net) Current Liabilities Accounts Payable Interest Payable Notes Payable Common stock Retained earnings 11.550 2,625 70,000 35,000 75,400 2. Recent and anticipated sales: August September October November December $70,000 $60,000 $90,000 S110,000 $130,000 3. Credit sales Sales are 60% for credit and 40% cash. Assume that the credit accounts are collected 15% within the month of sale, 72% within the month following the sale, 11% within the second month following the sale and 2% is uncollectible and written off immediately as a bad debt. 4. Cost of goods sold is 55% of sales. We pay for 65% of the purchases in the month of purchase and the remaining 35% of the purchases in the month following the purchase. 5. Inventory is equal to $20,000 at all times. 6. Operating costs: Salaries and wages average 26% of monthly revenues, other monthly operating costs are $4,100. Assume that these costs are paid out each month. Depreciation is $720 per month. 7. The note payable is due on June 30, 2021. Accrue monthly interest at 5% per annum that will be paid with the note payable balance on June 30, 2021 8. Assume that a minimum cash balance of $15,000 must be maintained. Assume also that all borrowing is effective at the beginning of the month and all repayments are made

Answer 1

A)

Particulars	October	November	December
Sales	$   90,000	$     1,10,000	$    1,30,000
Credit sales	$   54,000	$        66,000	$        78,000
Cash sales	$   36,000	$        44,000	$        52,000
Cash colletions
Cash sales	$   36,000	$        44,000	$        52,000
Credit sales colletion
15% in the month of sales	$      8,100	$           9,900	$        11,700
72% next month of sales	$   25,920	$        38,880	$        47,520
11% in 2 months	$      4,620	$           3,960	$          5,940
Total Collcetions	$   74,640	$        96,740	$    1,17,160

B)

Particulars	October	November	December
Sales	$   90,000	$     1,10,000	$    1,30,000
Cost of goods sold @ 55% of sales	$   49,500	$        60,500	$        71,500
Add: Closing stock	$   20,000	$        20,000	$        20,000
Less: Opening stock	$ (20,000)	$      (20,000)	$     (20,000)
Purchase	$   49,500	$        60,500	$        71,500
Payment
65% in the month of purchase	$   32,175	$        39,325	$        46,475
35% in one month	$   11,550	$        17,325	$        21,175
Total payments	$   43,725	$        56,650	$        67,650

C)

Particulars	October	November	December
Sales	$   90,000	$     1,10,000	$    1,30,000
Salaries and wages
26% of sales	$   23,400	$        28,600	$        33,800
Othe operating costs	$      4,100	$           4,100	$          4,100
Total cash expenses	$   27,500	$        32,700	$        37,900

Total cash disbursements
Particulars	October	November	December
Purchases	$   43,725	$        56,650	$        67,650
Operating expense	$   27,500	$        32,700	$        37,900
Total cash disbursments	$   71,225	$        89,350	$    1,05,550

D)

Cash Budget
Particulars	October	November	December
Opening	$   21,000	$        24,415	$        31,805
Sales collection	$   74,640	$        96,740	$    1,17,160
Less:
Purchases	$   43,725	$        56,650	$        67,650
Operating expense	$   27,500	$        32,700	$        37,900
Total	$   71,225	$        89,350	$    1,05,550
Closing balace	$   24,415	$        31,805	$        43,415

E) Statement of profit and loss for the quarter-end December 31.

Particulars	October	November	December	Total
Sales	$     90,000	$ 1,10,000	$ 1,30,000	$     3,30,000
Cost of goods sold	$     49,500	$     60,500	$     71,500	$     1,81,500
Gross profit	$     40,500	$     49,500	$     58,500	$     1,48,500
Other expenses
Salaries and wages	$     23,400	$     28,600	$     33,800	$         85,800
Othe operating costs	$        4,100	$        4,100	$        4,100	$         12,300
Bad debts	$        1,080	$        1,320	$        1,560	$           3,960
Depreciation	$           720	$           720	$           720	$           2,160
Interest accrued	$           292	$           292	$           292	875
Total expenses	29,592	35,032	40,472	1,05,095
Net Income	10,908	14,468	18,028	43,405

F) Balance sheet December 31,2019

Current assets
Cash	$     43,415
Accounts receivable (	$     72,000
Inventory	$     20,000
Equipment	$ 1,16,915
Total assets	$ 2,52,330
Current Liabilities
Acounts payable	$     25,025
Interest payable (2625+875)	$        3,500
Notes payable	$     70,000
Common stock	$     35,000
Retained earnings( 75400+43405)	$ 1,18,805
Total liabilities and equity	$ 2,52,330

Receivables:

November credit sales
11% in 2 months (66000*11%)	$        7,260
December credit sales
72% next month of sales	$     56,160
11% in 2 months	$        8,580
Closing balance	$     72,000