●
●
●
●
●
●
●
●
●
.
●
●
You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and earnings
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:
.
●
●
Cash
Accounts Receivable
Inventory
Prepaid Rent
●
Prop, Plant & Equip
Accum Depr
Total Assets
$
$
$
$
$
$
Net PP&E $
Garden Sales, Inc.
December 31, 2017
50,000.00
162,000.00
88,875.00
12,000.00
900,000.00
(100,000.00)
800,000.00
$ 1,112,875.00
Account Payable
Working Capital Line
$
Accrued Interest Payable $
Note Payable
Common Stock
Retained Earnings
26,662.50
50,000.00
$ 200,000.00
836,212.50
1,112,875.00
November 2017 and December 2017 sales were $120,000, each month
Sales for the following three months will decrease by $1,500 each month, beginning January through April.
Cost of Sales represents 75% of sales, each month.
Cash Operating Expenses are 15% of sales, exclusive of Depreciation expense
Depreciation Expense is $3,000, per month and prepaid rent is amortized at $1,000 per month
Of the month's sales, 10% 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, $2,000 from Nov A/R Sales will be written off
in Jan to Bad Debt Exp.
To maintain sufficient inventory, the company purchases 100% of the next month's cost of sales. They pay for 70%, in cash,
in the month they purchase and pay the remaining 30% in the following month.
In March, the company is planning on replacing an outdated machine. The new machine will cost $30,000. The old machine
originally cost $21,000 with a Net Book Value of 7,000 and will be sold for $5,000
The Company does not pay or accrue for taxes until the end of December.
The Company plans to pay a cash dividend of $3,000 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 $6,000, plus interest of $250, at the end of March. For this note, no
interest is Accrued/Expensed until interest is paid
The minimum cash month end balance required according to the bank agreement is $75,000 for any given month beginning
Jan 30, 2018.
A working capital line of credit is available, up to $25,000, and if needed, money is taken out at the beginning of the month.
Interest is ½ % 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 each period Jan-Mar 2018 (in good form)
3. Prepare a Balance Sheet as of March 31, 2018 (in good form)
4. Although you may use Excel, this assignment must be turned in as a HAND-WRITTEN document.