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
what are the concept of economic substance over legal form under accounting for lease?

Grants are not necessarily recognized as revenue when they are awarded. Columbus City was awarded a state reimbursement grant of $150,000 to assist its adult literacy program. The


I have a presentation on an article (around 20 pages). I also need 2 current real life examples (2 companies) to support the presentation. Can you do that? How long it will take yo

Illustration: Computation of retained profits acquisition Normal 0 false false false EN-US X-NONE X-NONE MicrosoftIn

Cashflows from investing activities Involving activities involve the acquisition and disposal of non-current assets such as; property, plant and equipment, intangible assets, a

Business start up accounting transactions: Jane Whitfield, a sole proprietor, established the JW Flower Shop on January 2, 2010. The following transactions have occurred during

Accounts of trustees The trustee must keep proper books of account, which may be inspected by the creditors at any time. The cash book must be audited by the committee of insp

1. The acceptance of a capital budgeting project is usually evaluated on its own merits. That is, capital budgeting decisions are treated separately from capital structure decision

I need extra help with receivable turnover, days'' sales uncollected, and bank reconciliation.