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Given DataCRAVAT SALES COMPANYCRAVAT SALES COMPANY

Given DataCRAVAT SALES COMPANYCRAVAT SALES COMPANYMinimum ending cash balance $ 10,000BudgetsSelling price (per unit) $ 8.10April May June QuarterRecent and forecast sales (in units):1a. Sales budget:January (actual) 20,000Budgeted sales in units 33,000 41,000 65,000 139,000February (actual) 24,000Selling price per unit $ 8.10 $ 8.10 $ 8.10 $ 8.10March (actual) 28,000Total sales $ 267,300 $ 332,100 $ 526,500 $ 1,125,900April 33,000Correct! Correct! Correct!May 41,0001b. Schedule of expected cash collections:June 65,000February sales $ 19,440 $ 19,440July 40,000March sales 136,080 22,680 $ 158,760August 36,000April sales 80,190 160,380 $ 26,730 $ 267,300September 32,000May sales 99,630 199,260 $ 298,890June sales 157,950 $ 157,950Desired ending inventories (percentage75%Total cash collections $ 235,710 $ 282,690 $ 383,940 $ 902,340 of next month’s sales)Correct! Correct! Correct! Correct!Cost of ties (per unit) $ 4.851c. Merchandise purchases budget:Budgeted sales in units 33,000 41,000 65,000 139,000Purchases paid as follows:Add budgeted ending inventory 30,750 48,750 30,000 30,000 In month of purchase50%Total needs 63,750 89,750 95,000 169,000 In following month50%Less beginning inventory 24,750 30,750 48,750 24,750Required unit purchases 39,000 59,000 46,250 144,250Collection on sales:Unit cost $ 4.85 $ 4.85 $ 4.85 $ 4.85 Sales collected current month30%Required dollar purchases $ 189,150.00 $ 286,150.00 $ 224,312.50 $ 699,612.50 Sales collected following month60%Correct! Correct! Correct! Correct! Sales collected 2nd month following10%1d. Budgeted cash disbursements for inventory purchases:March purchases $ 76,993.75 $ 76,994Variable monthly expenses:April purchases 94,575 $ 94,575 $ 189,150 Sales commissions (per tie) $ 1.00May purchases 143,075 $ 143,075 $ 286,150June purchases 112,156.25 112,156.25Fixed monthly expenses:Total cash payments $ 171,568.75 $ 237,650 255,231.25 664,450.00 Wages and salaries $ 22,000Correct! Correct! Correct! Correct! Utilities $ 14,000 Insurance $ 1,2002. Depreciation $ 1,500CRAVAT SALES COMPANY Miscellaneous $ 3,000Cash BudgetFor the Three Months Ending June 30Land purchased in May $ 30,000Dividends declared each quarter $ 12,000April May June QuarterCash balance, beginning $ 14,000 $ 12,141.25 $ 12,181.25 $ 38,323Balance sheet at March 31:Add receipts from customers 235,710 282,690 383,940 902,340AssetsTotal cash available 249,710 294,831 396,121 940,663Cash $ 14,000Less disbursements:Accounts receivable Purchase of inventory 171,568.75 237,650.00 255,231.25 664,450 February sales $ 19,440 Sales commissions 33,000 41,000 65,000 139,000 March sales 158,760 178,200 Salaries and wages 22,000 22,000 22,000 66,000Inventory (24,750 units) 120,037.50 Utilities 14,000 14,000 14,000 42,000Prepaid insurance 14,400 Miscellaneous 3,000 3,000 3,000 9,000Fixed assets, net of depreciation 172,700 Dividends paid 4,000 4,000 4,000 12,000Total assets $ 499,337.50 Land purchases 30,000 30,000Total disbursements 247,568.75 351,650.00 363,231.25 962,450Liabilities and Stockholders’ EquityExcess (deficiency) of receiptsAccounts payable $76,993.75 over disbursements 2,141.25 (56,818.75) 32,890.00 (21,788)Dividends payable 12,000Financing:Capital stock 300,000 Borrowings 10,000 69,000 79,000Retained earnings 110,343.75 Repayments 22,000 22,000Total liabilities and stockholders’ equity $ 499,337.50 Interest (1,680) (1,680)Total financing 10,000 69,000 20,320 55,320Agreement with Bank:Cash balance, ending $ 12,141.25 $ 12,181.25 $ 12,570.00 $ 12,570Borrowing increments $ 1,000Correct! Correct! Try again! Try again!Maximum borrowing amount$300,000Interest rate per month1%3.Repayment increments $ 1,000CRAVAT SALES COMPANYTotal of interest paid each quarter100%Budgeted Income StatementRequired minimum cash balance $ 12,000For the Three Months Ended June 30Sales in units 139,000Sales $ 1,125,900Variable expenses: Cost of goods sold $ 699,613 Commissions 139,000 838,613Contribution margin 287,288Fixed expenses: Salaries and wages 66,000 Utilities 42,000 Insurance expired 3,600 Depreciation 4,500 Miscellaneous 9,000 125,100Net operating income 162,188Less interest expense (1,680)Net income $ 163,868Try again!4.CRAVAT SALES COMPANYBudgeted Balance SheetJune 30AssetsCashAccounts receivable 24,750Inventory 30,000Unexpired insuranceFixed assets, net of depreciation 1,500Total assetsLiabilities and Stockholders’ EquityAccounts payable, purchases $76,933.75Dividends payable 12,000Loans payable, bank 79,000Capital stock, no par 300,000Retained earningsTotal liabilities and equityAccounts receivable at June 30: May sales $ 332,100 June sales 526,500 TotalRetained earnings at June 30: Balance, March 31 Add net income Total Less dividends declared Balance, June 30

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