Homework is due by 5pm and I cannot figure out the solutions for


Question Description:

30

Homework is due by 5pm and I cannot figure out the solutions for this problem. Please help! Problem 5-35 (Part Level Submission).pdf 5/3/2016 Problem 5-35 (Part Level Submission) Print by: Trevor Gurganious BUS_108_001_16S: Financial Evaluation And Managerial Analysis 108 (001) (Spring 2016) / HW5 *Problem 5­35 (Part Level Submission) GrowMaster Products, a rapidly growing distributor of home gardening equipment, is formulating its plans for the coming year. Carol Jones, the firm’s marketing director, has completed the following sales forecast. Month Sales January February $905,800 $1,000,900 March $905,800 Month Sales July $1,510,000 August $1,510,000 September $1,603,300 April $1,156,200 October $1,603,300 May $1,250,600 November $1,510,000 June $1,405,500 December $1,709,200 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. He has gathered the following information. ● All sales are made on credit. ● GrowMaster’s excellent record in accounts receivable collection is expected to continue, with 60 percent of billings collected in the month after sale and the remaining 40 percent collected two months after the sale. ● Cost of goods sold, GrowMaster’s largest expense, is estimated to equal 40 percent of sales dollars. Seventy percent of inventory is purchased one month prior to sale and 30 percent during the month of sale. For example, in April, 30 percent of April cost of goods sold is purchased and 70 percent of May cost of goods sold is purchased. ● All purchases are made on account. Historically, 75 percent of accounts payable have been paid during the month of purchase, and the remaining 25 percent in the month following purchase. ● Hourly wages and fringe benefits, estimated at 30 percent of the current month’s sales, are paid in the month incurred. ● General and administrative expenses are projected to be $1,573,400 for the year. A breakdown of the expenses follows. All expenditures are paid monthly throughout the year, with the exception of property taxes, which are paid in four equal installments at the end of each quarter. Salaries and fringe benefits $ 327,100 Advertising 377,800 Property taxes 143,800 Insurance 194,500 Utilities 183,000 Depreciation 347,200 Total $ 1,573,400 ● Operating income for the first quarter of the coming year is projected to be $329,600. GrowMaster is subject to a 40 percent tax rate. The company pays 100 percent of its estimated taxes in the month following the end of each quarter. ● GrowMaster maintains a minimum cash balance of $50,000. If the cash balance is less than http://edugen.wileyplus.com/edugen/shared/assignment/test/qprint.uni 1/2 5/3/2016 Problem 5-35 (Part Level Submission) $50,000 at the end of the month, the company borrows against its 12 percent line of credit in order to maintain the balance. All borrowings are made at the beginning of the month, and all repayments are made at the end of the month (in increments of $1,000). Accrued interest is paid in full with each principal repayment. The projected cash balance on April 1 is $51,100. *(a) Prepare the cash receipts budget for the second quarter. (Enter answers in necessary fields only. Leave other fields blank. Do not enter 0.) Cash Receipts Budget April February sales May June $ $ $ $ $ $ March sales April sales May sales Totals Accounts Receivable balance at the end of second quarter of 2012 $ Attempts: 0 of 3 used *(b) The parts of this question must be completed in order. This part will be available when you complete the part above. *(c) The parts of this question must be completed in order. This part will be available when you complete the part above. *(d) The parts of this question must be completed in order. This part will be available when you complete the part above. Copyright © 2000­2016 by John Wiley & Sons, Inc. or related companies. All rights reserved. http://edugen.wileyplus.com/edugen/share

Answer

30