| Earrings Unlimited | ||||||
| 1 | ||||||
| a | Sales budget | |||||
| April | May | June | Total | |||
| Sales (units) | 68,000 | 103,000 | 53,000 | 224,000 | ||
| Sales (dollars) | $ 1,292,000 | $ 1,957,000 | $ 1,007,000 | $ 4,256,000 | ||
| b | Cash collections from sales | |||||
| April | May | June | Total | |||
| February sales | $ 55,100 | $ 55,100 | ||||
| March sales | $ 571,900 | $ 55,100 | $ 627,000 | |||
| April sales | $ 258,400 | $ 904,400 | $ 129,200 | $ 1,292,000 | ||
| May sales | $ 391,400 | $ 1,369,900 | $ 1,761,300 | |||
| June sales | $ 201,400 | $ 201,400 | ||||
| Total collections | $ 885,400 | $ 1,350,900 | $ 1,700,500 | $ 3,936,800 | ||
| c | Merchandise purchase budget | |||||
| April | May | June | Total | |||
| In units | ||||||
| Desired ending inventory | 41,200 | 21,200 | 12,000 | 74,400 | ||
| Add: Sales during the month | 68,000 | 103,000 | 53,000 | 224,000 | ||
| Less: Opening inventory | (27,200) | (41,200) | (21,200) | (89,600) | ||
| Purchases | 82,000 | 83,000 | 43,800 | 208,800 | ||
| Purchases (in dollars) @ $4 per unit | $ 451,000 | $ 456,500 | $ 240,900 | $ 1,148,400 | ||
| d | Cash disbursement for purchases | |||||
| April | May | June | Total | |||
| March purchases | $ 115,000 | $ 115,000 | ||||
| April purchases | $ 225,500 | $ 225,500 | $ 451,000 | |||
| May purchases | $ 228,250 | $ 228,250 | $ 456,500 | |||
| June purchases | $ 120,450 | $ 120,450 | ||||
| Total disbursements | $ 340,500 | $ 453,750 | $ 348,700 | $ 1,142,950 | ||
| 2 | Cash budget | |||||
| April | May | June | Total | |||
| Beginning cash balance | $ 89,000 | $ 65,470 | $ 344,340 | $ 89,000 | ||
| Receipts from customers | $ 885,400 | $ 1,350,900 | $ 1,700,500 | $ 3,936,800 | ||
| Total cash | $ 974,400 | $ 1,416,370 | $ 2,044,840 | $ 4,025,800 | ||
| Cash disbursements: | ||||||
| To vendors for purchases | $ 340,500 | $ 453,750 | $ 348,700 | $ 1,142,950 | ||
| Sales commissions | $ 51,680 | $ 78,280 | $ 40,280 | $ 170,240 | ||
| Advertising | $ 350,000 | $ 350,000 | $ 350,000 | $ 1,050,000 | ||
| Rent | $ 33,000 | $ 33,000 | $ 33,000 | $ 99,000 | ||
| Salaries | $ 106,000 | $ 106,000 | $ 106,000 | $ 318,000 | ||
| Utilities | $ 14,500 | $ 14,500 | $ 14,500 | $ 43,500 | ||
| Purchase of new equipment | $ – | $ 23,500 | $ 55,000 | $ 78,500 | ||
| Payment of dividends | $ 26,250 | $ – | $ – | $ 26,250 | ||
| Interest on borrowings | $ – | $ – | $ 130 | $ 130 | ||
| Total disbursements | $ 921,930 | $ 1,059,030 | $ 947,610 | $ 2,928,570 | ||
| Excess (Deficiency) of Cash Available | $ 52,470 | $ 357,340 | $ 1,097,230 | $ 1,097,230 | ||
| Financing: | ||||||
| Cash Borrowed | $ 13,000 | $ – | $ – | $ 13,000 | ||
| Loan Repayments | $ – | $ 13,000 | $ – | $ 13,000 | ||
| Loan Balance | $ 13,000 | $ – | $ – | $ – | ||
| Cash Balance at End of Month | $ 65,470 | $ 344,340 | $ 1,097,230 | $ 1,097,230 | ||
| Budgeted Income Statement for the period ended June 30 | ||||||
| 3 | ||||||
| Sales | $ 4,256,000 | |||||
| Less: Variable expenses | ||||||
| Beginning inventory | $ 149,600 | |||||
| Add: Purchases | $ 1,148,400 | |||||
| Less: Ending inventory | $ (48,000) | |||||
| Cost of goods sold | $ 1,250,000 | |||||
| Sales commission | $ 170,240 | |||||
| Contribution margin | $ 2,835,760 | |||||
| Less: Operating expenses | ||||||
| Advertising | $ 1,050,000 | |||||
| Rent | $ 99,000 | |||||
| Salaries | $ 318,000 | |||||
| Utilities | $ 43,500 | |||||
| Insurance | $ 13,500 | |||||
| Depreciation | $ 87,000 | |||||
| Interest expense | $ 130 | |||||
| Total operating expenses | $ 1,611,130 | |||||
| Net income | $ 1,224,630 | |||||
| 4 | Budgeted Balance Sheet as at June 30 | |||||
| Assets | ||||||
| Cash | $ 1,097,230 | |||||
| Accounts receivable (May sales $100,000 ; June sales $500,000) | $ 1,001,300 | |||||
| Inventory | $ 48,000 | |||||
| Prepaid insurance | $ 7,500 | |||||
| Property, plant and equipment (net) | $ 941,500 | |||||
| Total assets | $ 3,095,530 | |||||
| Liabilities and stockholder’s equity | ||||||
| Accounts payable | $ 120,450 | |||||
| Dividends payable | $ 15,000 | |||||
| Capital stock | $ 800,000 | |||||
| Retained earnings | $ 1,789,630 | |||||
| Total liabilities and stockholder’s equity | $ 2,725,080 | |||||
