E22-27 Preparing a financial budget Cramer Company projects the following sales for the first three months of the year: $12,500 in January;$13,240 in February;and $14,600 in March. The company expects 70% of the sales to be cash and the remainder on acc
E22-24;E22-27;CP22-56;E22A-32;E22-24 Preparing an operating budget;Dunbar Company manufactures drinking glasses. One unit is a package of 8 glasses;which sells for $20. Dunbar projects sales for April will be 3,000 packages, with;sales increasing by 100 packages per month for May, June, and July. On April 1;Dunbar has 250 packages on hand but desires to maintain an ending inventory of;10% of the next month?s sales. Prepare a sales budget and a production budget for;Dunbar for April, May, and June.;E22A-32 Preparing an operating budget;Tremont, Inc. sells tire rims. Its sales budget for the nine months ended September;30, 2014, follows;Quarter Ended Nine-Month;Total;March 31 June 30 September 30;Cash sales, 20% $ 24,000 $ 34,000 $ 29,000 $ 87,000;Credit sales, 80% 96,000 136,000 116,000 348,000;Total sales $ 120,000 $ 170,000 $ 145,000 $ 435,000;In the past, cost of goods sold has been 40% of total sales. The director of marketing;and the financial vice president agree that each quarter?s ending inventory;should not be below $20,000 plus 10% of cost of goods sold for the following;quarter. The marketing director expects sales of $220,000 during the fourth quarter.;The January 1 inventory was $32,000. Prepare an inventory, purchases, and cost of;goods sold budget for each of the first three quarters of the year. Compute cost of;goods sold for the entire nine-month period.;P22-56 Preparing a financial budget;This problem continues the Davis Consulting, Inc. situation from Problem P21-63 of;Chapter 21. Assume Davis Consulting began January with $29,000 cash. Management;forecasts that cash receipts from credit customers will be $49,000 in January and;$51,500 in February. Projected cash payments include equipment purchases ($17,000;in January and $40,000 in February) and selling and administrative expenses ($6,000;each month).;Davis?s bank requires a $20,000 minimum balance in the firm?s checking account.;At the end of any month when the account balance falls below $20,000;the bank automatically extends credit to the firm in multiples of $5,000. Davis;borrows as little as possible and pays back loans each month in $1,000 increments;plus 5% interest on the entire unpaid principal. The first payment occurs one;month after the loan.;Requirements;1. Prepare Davis Consulting?s cash budget for January and February 2013.;2. How much cash will Davis borrow in February if cash receipts from customers;that month total $21,500 instead of $51,500?;Prepare your answers in an Excel workbook, using one worksheet per exercise or problem.
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