Prepare three years of monthly cash budgets for company, Financial Accounting

1. Prepare three years of monthly cash budgets, yearly income statements, and yearly balance sheets for the jewelry business Daisy & Company.

General Information:

1. This is a family-run jewelry store.

2.  Assume it is a sole proprietorship, so there are no corporate taxes.  The income of the business is taxed as personal income to the business owner.

3. The physical location of the business is inside a shopping mall.  The company does not pay additional property taxes or any other associated fees except for monthly rent.  

Financial Information:

1. Sales forecasts for 2011 are listed below.

Month

Sales [in thousands]

January

$120

February

$200

March

$180

April

$200

May

$200

June

$210

July

$210

August

$220

September

$250

October

$280

November

$300

December

$350

2.  Assume sales are forecast to decrease by 5% annually from 2012 - 2013 due to the current economic climate. The seasonal sales pattern will still apply.

3.  An equity contribution of $100,000 cash was made at the start of the jewelry store.

4.  Employee Related Expenses: Assume that the jewelry store is open 12 hours each day X 363 days [4, 356 hours]. Daisy & Co. also employs individuals to work part-time at 6 hours each day X 363 days each year [2,178 hours].  Other employee related expenses are 5% of salaries and wages. Assume the total salaries and wages are paid on an equal monthly basis.

Owner's Salary

$125,000

1 Floor Manager

4,356 x $22.75 = $99,099

1 Purchasing Manager

4,356 x $17.25 = $75,141

2 Full-Time Sales Clerks

4,356 x $11.00 x 2 = $95,832

2 Part-Time Sales Clerks

2,178 x $9.75 x 2 = $42,471

1 Part-Time Purchasing Clerk

2,178 x $12.50 = $27,225

1 Cleaning Lady

$8,000

Total Salaries & Wages

$472,768

5. Daisy & Co. was issued a $500,000, 15-year loan, issued at 12.65% interest that required monthly payments.  The loan proceeds were used for:

Rental space remodel

$180,000

Initial inventory purchase

$320,000

6. The rental space remodel is attributed to furniture and fixtures that are being depreciated on a 5-year, straight-line basis.

Other Information:

1.  Daisy & Co. wishes to maintain a $35,000 minimum cash balance.

2.  Advertising and marketing related expenses are 2% of sales.

3.  COGS are 35% of sales. The company pays cash for inventory in the month of sale.

4.  Insurance expense is 1.5% of sales.

5.  Administrative expenses are 1.75% of sales

6.  Utilities and telephone are included in the monthly rent of $9,000.

7.  Bank charges are 1% of sales.

8.  Daisy & Co. has a 60-day credit policy. Approximately 30% of their customers pay on credit and the remainder pay in cash. Assume half of all of the customers who purchased on credit will pay within one month and the remainder will pay the following month.

9.   Additionally, operating expenses are 4.5% of sales.

Posted Date: 2/19/2013 1:19:36 AM | Location : United States







Related Discussions:- Prepare three years of monthly cash budgets for company, Assignment Help, Ask Question on Prepare three years of monthly cash budgets for company, Get Answer, Expert's Help, Prepare three years of monthly cash budgets for company Discussions

Write discussion on Prepare three years of monthly cash budgets for company
Your posts are moderated
Related Questions
Received 10,000 contribution from bill london in exchange for common stock What 2 accounts are used

ARG Co presently has $50m of fixed assets and long-term debt of $10m. The issue of $3m of 9% debentures will raise fixed assets by $2m of buildings and machinery. There appears to

Prepare an Excel spreadsheet containing the following: - Construct the next five-year pro-forma statements (income statement and balance sheet). - Estimate annual F

IAS 1 contents of financial statements IAS 1 prescribes the contents of published financial statements. The major reports that are included as part of the published financial sta

The maximum possible loss method Under this method, a table is set up to compute the amounts payable to each partner. The results of the computation may be then posted into the

Form No special form is normally required for the creation of a trust except that a declaration of trust respecting land or any interest therein must be manifested and proved b


Question 01: (1.1 and 1.3) What is accounting and how is accounting environment? Question 02: (1.2 and 1.4) Presenting the characteristics of the quality of accounting information

The statement of comprehensive income for the year ended 31 December 2009 and its comparative is shown below: 2009 2008 $m

i need help with my project