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BMAL530 Assignment: Homework 7 FALL 2014

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Question;[The following information applies to;the questions displayed below.];Aztec;Company sells its product for $160 per unit. Its actual and projected sales;follow.;Units;Dollars;April;(actual);7,000;$1,120,000;May;(actual);3,200;512,000;June;(budgeted);5,500;880,000;July;(budgeted);6,000;960,000;August;(budgeted);4,200;672,000;All;sales are on credit. Recent experience shows that 26% of credit sales is;collected in the month of the sale, 44% in the month after the sale, 24% in;the second month after the sale, and 6% proves to be uncollectible. The;product?s purchase price is $110 per unit. All purchases are payable within;15 days. Thus, 60% of purchases made in a month is paid in that month and the;other 40% is paid in the next month. The company has a policy to maintain an;ending monthly inventory of 20% of the next month?s unit sales plus a safety;stock of 50 units. The April 30 and May 31 actual inventory levels are;consistent with this policy. Selling and administrative expenses for the year;are $1,668,000 and are paid evenly throughout the year in cash. The company?s;minimum cash balance at month-end is $130,000. This minimum is maintained, if;necessary, by borrowing cash from the bank. If the balance exceeds $130,000;the company repays as much of the loan as it can without going below the;minimum. This type of loan carries an annual 13% interest rate. On May 31;the loan balance is $42,000, and the company?s cash balance is $130,000.(Round final answers to the nearest whole dollar.);rev: 11_19_2013_QC_40413, 10_21_2014_QC_56990;1.;award:2.30 out of;2.30 points;Required;1.;Prepare;a table that shows the computation of cash collections of its credit sales;(accounts receivable) in each of the months of June and July.;2.;award:2.30 out of;2.30 points;2.;Prepare;a table that shows the computation of budgeted ending inventories (in units);for April, May, June, and July.;3.;award:2.30 out of;2.30 points;3.;Prepare;the merchandise purchases budget for May, June, and July. Report calculations;in units and then show the dollar amount of purchases for each month..;award:2.30 out of;2.30 points;4.;Prepare;a table showing the computation of cash payments on product purchases for;June and July.;5.;award:2.30 out of;2.30 points;5.;Prepare;a cash budget for June and July, including any loan activity and interest;expense. Compute the loan balance at the end of each month. (Do not round intermediate calculations.);The following information applies to the questions displayed below.];Near the end of 2013, the management of Dimsdale Sports Co., a;merchandising company, prepared the following estimated balance sheet for;December 31, 2013.;DIMSDALE SPORTS COMPANY;Estimated Balance Sheet;December 31, 2013;Assets;Cash;$;35,500;Accounts receivable;520,000;Inventory;165,000;Total current assets;720,500;Equipment;$;539,000;Less accumulated depreciation;67,375;Equipment, net;471,625;Total assets;$;1,192,125;Liabilities and Equity;Accounts payable;$;365,000;Bank loan payable;16,000;Taxes payable (due 3/15/2014);90,000;Total liabilities;$;471,000;Common stock;474,000;Retained earnings;247,125;Total stockholders? equity;721,125;Total liabilities and equity;$;1,192,125;To prepare a master budget for January, February, and March of 2014;management gathers the following information.;a.;Dimsdale Sports? single product is purchased for $30 per unit and;resold for $54 per unit. The expected inventory level of 5,500 units on;December 31, 2013, is more than management?s desired level for 2014, which is;20% of the next month?s expected sales (in units). Expected sales are;January, 7,000 units, February, 8,500 units, March, 11,250 units, and April;10,500 units.;b.;Cash sales and credit sales represent 25% and 75%, respectively, of;total sales. Of the credit sales, 63% is collected in the first month after;the month of sale and 37% in the second month after the month of sale. For;the December 31, 2013, accounts receivable balance, $120,000 is collected in;January and the remaining $400,000 is collected in February.;c.;Merchandise purchases are paid for as follows: 20% in the first month;after the month of purchase and 80% in the second month after the month of;purchase. For the December 31, 2013, accounts payable balance, $80,000 is;paid in January and the remaining $285,000 is paid in February.;d.;Sales commissions equal to 20% of sales are paid each month. Sales;salaries (excluding commissions) are $90,000 per year.;e.;General and administrative salaries are $144,000 per year. Maintenance;expense equals $2,000 per month and is paid in cash.;f.;Equipment reported in the December 31, 2013, balance sheet was;purchased in January 2013. It is being depreciated over eight years under the;straight-line method with no salvage value. The following amounts for new;equipment purchases are planned in the coming quarter: January, $37,000;February, $94,000, and March, $29,000. This equipment will be depreciated;under the straight-line method over eight years with no salvage value. A full;month?s depreciation is taken for the month in which equipment is purchased.;g.;The company plans to acquire land at the end of March at a cost of;$140,000, which will be paid with cash on the last day of the month.;h.;Dimsdale Sports has a working arrangement with its bank to obtain;additional loans as needed. The interest rate is 12% per year, and interest;is paid at each month-end based on the beginning balance. Partial or full;payments on these loans can be made on the last day of the month. The company;has agreed to maintain a minimum ending cash balance of $19,740 in each;month.;i.;The income tax rate for the company is 37%. Income taxes on the first;quarter?s income will not be paid until April 15.;Required;Prepare a master budget for each of the first three months of 2014;include the following component budgets;rev: 04_30_2014_QC_49073, 07_19_2014_QC_51562;6.;award:2.30 out of;2.30 points;1.;Monthly;sales budgets.;7.;award:2.30 out of;2.30 points;2.;Monthly;merchandise purchases budgets.;8.;award:2.30 out of;2.30 points;3.;Monthly;selling expense budgets.;9.;award:2.30 out of;2.30 points;4.;Monthly;general and administrative expense budgets.;10.;award:2.30 out of;2.30 points;5.;Monthly;capital expenditures budgets.;11.;award:2.30 out of;2.30 points;6.;Monthly;cash budgets.;12.;award:2.30 out of;2.30 points;7.;Budgeted;income statement for the entire first quarter (not for each month).;13.;award:2.40 out of;2.40 points;8.;Budgeted;balance sheet as of March 31, 2014.

 

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