EJERCICIO 7.2 South Comercial SA preparing their budgets for 2002.

Below are some details of the company is. forecasted sales VENTAS PRONOSTICADAS

JANUARY FEBRUARY MARCH APRIL

$ $ $ $

140,000 140,000 160,000 200,000

BALANCE SHEET DATA CASH CUSTOMERS NOVEMBER SALES DECEMBER SALES INVENTORY OF MERCHANDISE Suppliers (MERC) $ $ $ $ $ 10,000 36,000 80,000 52,000 45,000

ADDITIONAL INFORMATION a) sales are on credit. 60 % of sales charged during the following month of the transaction , the remaining 40% in the second month after the sale. b ) Cost of sales sold is 50% of sales. c ) Other variable costs are the 105 sales , you pay the same month they are incurred . d ) The ending inventory is 150% of what is required for sales next month. e) Purchases are paid in the month following made. f ) Fixed expenses are $ 15,000 per month. Include $ 5000 plus depreciation. g ) The general direction in 2002 will implement a new policy in relative to cash . A minimum balance of $ 10,000 at the end of each month is established. Can be borrow only the first day . You can only order and pay quantities that are multiples of 5000 . Payments are made only last day of the month and pay what you can , as soon as possible. Interest is 2 % per month and paid proportionately to the payment principal is made. Required: 1) Prepare a purchases budget for each of the three early 2002 , describe your procedure. 2) Prepare an income statement for each of the first four months . 3) Prepare a cash budget for each of the first four months of 2002 , showing the balance before interest and balance end. 4) It is assumed that in May a balance of cash before fiancing of $ 30,000 . What answer about the new policy direction generally above the minimum cash balance ?

N1 BUDGET SHOPPING THE FIRST THREE MONTHS JANUARY $ 52,000 $ 123,000 $ 105,000 $ 70,000 $ FEBRUARY $ 105,000 $ 85,000 $ 120,000 $ 70,000 MARCH APRIL $ 120,000 $ 150,000 $ 110,000 $ 150,000 $ 80,000 $ 100,000 110,000
INVENTORY

BEGINNIG INVENTORY (+) PURCHASE OF MERCHANDISE (-) FINAL INVENTORY OF MERCHANDISE = COST OF SALES 50% PURCHASE OF MERCHANDISE
PURCHASE

123,000 $

85,000 $
BEGINNIG

COST OF SALES FINAL INVENTORY

SALES (-) COST OF SALES (=) GROSS PROFIT IN SALES (-) FIXED COSTS - VARIABLE COSTS 10% (=) OPERATING INCOME

N2 STATEMENT OF EARNINGS JANUARY FEBRUARY $ 140,000 $ 140,000 $ (70,000) $ (70,000) $ 70,000 $ 70,000 $ (15,000) $ (15,000) $ (14,000) $ (14,000) $ 41,000 $ 41,000

MARCH $ 160,000 $ (80,000) $ 80,000 $ (15,000) $ (16,000) $ 49,000

APRIL $ 200,000 $ (100,000) $ 100,000 $ (15,000) $ (20,000) $ 65,000

N3 CASH BUDGET JANUARY FEBRUARY MARCH APRIL $ 10,000 $ 35,000 $ 14,000 $ 32,983 $ $ $ $ $ $ $ $ $ 94,000 $ 104,000 $ 45,000 10,000 14,000 69,000 10,000 79,000 25,000 $ $ $ $ $ $ $ $ 116,000 $ 151,000 $ 123,000 10,000 14,000 147,000 10,000 157,000 (6,000) 10,000 $ $ $ $ $ $ $ 140,000 $ 154,000 $ 85,000 10,000 16,000 111,000 10,000 121,000 33,000 $ $ $ $ $ $ $ 152,000 184,983 110,000 10,000 20,000 140,000 10,000 150,000 34,983

OPENING BALANCE CASH (+) INPUTS OPERATION CHARGES RECEIVABLES (=) CASH ON HAND (-) OUTPUT OPERATION PURCHASES MERCHANDISE FIXED COSTS VARIABLE COST (=) TOTAL OUTPUTS (-) DESIRED MINIMUM (=) REQUIREMENTS CASH (=) EXCESS - ( MISSING ) LOANS PRINCIPAL PAYMENT INTEREST (=) INPUTS- (OUTPUTS) FINANCIAL BALANCE CASH

$ $ 35,000 $

$ 10,000 $ 16.67 10,000 $ (10,016.67) 14,000 $ 32,983 $ 44,983

FIXED COSTS VARIABLE COSTS JANUARY FEBRUARY MARCH APRIL

$ $ $ $

15,000 15,000 15,000 15,000

VARIABLE COST JANUARY $ 140,000 FEBRUARY $ 140,000 MARCH $ 160,000 APRIL $ 200,000

CUSTOMER CHARGE SCHEDULED JANUARY $ 48,000 $ 36,000 $ 84,000 FEBRUARY $ 84,000 $ 32,000 $ 116,000 FEBRUARY $ 84,000 $ 56,000 $ 140,000 APRIL $ 96,000 $ 56,000 $ 152,000

CREDIT SALES 60% CREDIT SALES 40% TOTAL

SCHEDULED PAYMENT PROVIDER JANUARY $ FEBRUARY FEBRUARY APRIL 45,000 $ 123,000 $ 85,000 $ 110,000