Question

Abbott Inc.  

Minimum ending cash balance	$80,000
Cost of Goods Sold (as a percentage of sales)	60%
Gross margin (as a percentage of sales)	40%
Recent and forecast sales :
March (Actual)	$60,000
April	70,000
May	85,000
June	90,000
July	50,000
Desired ending inventories (percentage of next month's cost of goods sold)	30%
Purchases paid as follows:
In month of purchase	50%
In following month	50%
Collection on Sales
Cash Sales	20%
Credit Sales	80%
All payments on credit sales are collected in the month following the sale.
Variable monthly expenses:
Shipping expenses (as a percentage of sales)	6%
Other expenses (as a percentage of sales)	4%
Fixed monthly expenses:
Wages and salaries	$7,500
Advertising	6,000
Depreciation (per quarter)	6,000

Equipment purchased in April	$11,500
Equipment purchased in May	3,000
Dividends declared each quarter (Paid at End of Qtr.)	3,500
Balance sheet at March 31:
Assets:
Cash	$9,000
Accounts receivable	48,000
Inventory	12,600
Fixed assets, net of depreciation	214,100
Total Assets	$       283,700
Liabilities and Stockholders' Equity:	$18,300
Capital Stock	190,000
Retained earnings	75,400
Total liabilities and stockholders' equity	$       283,700
Agreement with Bank:
Maximum borrowing amount	$20,000
Repayment increments	1,000
Required minimum cash balance	8,000
Interest rate (per month) (not compounded)	1%
If able the company will pay the loan plus accumulated interest at the end of the quarter.
Please Answer the following:
Part 1: Schedule of expected cash collections
Part II: Merchandise Purchases Budget
Part III: Schedule of Expected Cash Disbursements for Merchandise Purchases
Part IV: Schedule of Expected Cash Disbursements for Selling and Administrative Expenses
Part V: Cash Budget
Part VI: Budgeted Income Statement
Part VII: Budgeted Balance Sheet

Answer 1