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ABC Company - Excel Project Instructions Part A Budgeted balance sheet, Part B NPV




Question;ABC Company - Excel Project Instructions;Excel Project Instructions;Assume ABC;Company has asked you to not only prepare their 2013 year-end Balance Sheet;but to also provide pro-forma FINANCIAL statements for 2014.;In addition;they have asked you to evaluate their company based on the pro-forma;statements and with regard to ratios. They also want you to evaluate 3;projects they are considering. Their information is as follows;End of the year information;Account;12/31/2013;Ending Balance;Cash;160,000;Accounts Receivable;42,500;Inventory;63,400;Equipment;745,000;Accumulated Depreciation;292,460;Accounts Payable;36,900;Short-term Notes Payable;18,300;Long-term Notes Payable;157,225;Common STOCK;450,000;Retained Earnings;solve;Additional Information;? Sales for December total 12,000 units. Each month?s sales are;expected to exceed the prior month?s results by 5%. The product?s selling;price is $15 per unit.;? Company policy calls for a given month?s ending inventory to;equal 80% of the next month?s expected unit sales. The December 31 inventory;is 9,400 units, which complies with the policy. The purchase price is $8 per;unit.;? Sales representatives? commissions are 10.0% of sales and are;paid in the month of the sales. The sales manager?s monthlysalary will be $3,500 in;January and $4,000 per month thereafter.;? Monthly general and administrative expenses include $8,000;administrative salaries, $5,000 depreciation, and 0.9% monthly interest on;the long-term note payable.;? The company expects 30% of sales to be for cash and the;remaining 70% oncredit. Receivables are collected in full in the month following the;sale (none is collected in the month of sale).;? All merchandise purchases are on credit, and no payables arise;from any other transactions. One month?s purchases are fully paid in the next;month.;The minimum ending cash balance for all months is $140,000. If;necessary, the company borrows enough cash using a short-term note to reach;the minimum. Short-term notes require an interest payment of 1% at each;month-end (before any repayment). If the ending cash balance exceeds the;minimum, the excess will be applied to repaying the short-term notes payable;balance.;? Dividends of $100,000 are to be declared and paid in February.;? No cash payments for income taxes are to be made during the;first calendar quarter. Income taxes will be assessed at 35% in the quarter.;? Equipment purchases of $55,000 are scheduled for March.;ABC;Company?s management is also considering 3 new projects consisting of the;purchase of new equipment. The company has limited resources, and may not be;able to complete make all 3 purchases. The information is as follows for the;purchases below.;Project 2;Project 3;Project 1;Purchase Price;$50,000;$75,000;$32,500;Required Rate of Return;12%;8%;10%;Time Period;3 years;5 years;2 years;Cash Flows ? Year 1;$18,000;$25,000;$20,000;Cash Flows ? Year 2;$22,000;$20,000;$18,000;Cash Flows ? Year 3;$22,000;$18,000;N/A;Cash Flows ? Year 4;N/A;$16,500;N/A;Cash Flows ? Year 5;N/A;$15,000;N/A;Required Action;Part A;Prepare;the year-end Balance Sheet for 2013. Be sure to use proper headings.;Prepare budgets;such that the pro-forma FINANCIAL;statements may;be prepared.;Sales;budget, including budgeted sales for April.;Purchases;budget, the budgeted cost of goods sold for each month and quarter, and the;cost of the March 31 budgeted inventory.;Selling expense budget.;General;and administrative expense budget.;Expected;cash receipts from customers and the expected March 31 balance of accounts;receivable.;Expected;cash payments for purchases and the expected March 31 balance of accounts;payable.;Cash budget.;Budgeted income statement.;Budgeted;statement of retained earnings.;Budgeted balance sheet.;Part B;Calculate;using Excel formulas, the NPV of each of the 3 projects.;It;is possible that ABC Company may not be able to complete all 3 projects.;Therefore, please advise ABC Company as to the order in which they should;pursue the projects (i.e. which project should ABC Company attempt to do;first, second, and last).;Provide;justification and analysis as to why you chose the order you did. The;analysis should also be done in Excel, not in a separate document.;This assignment;must be submitted as 1 Excel document.


Paper#37572 | Written in 18-Jul-2015

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