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Unformatted text preview: Lebo & Co. Instructions: You have just been hired as a new management trainee by Lebo & Co., a distributor of br country. In the past, the company has done very little in the way of budgeting and at cer Since you are well trained in budgeting, you have decided to prepare comprehensive bud benefits that can be gained from an integrated budgeting program. To this end, you have assembled below. The company sells many styles of bracelets, but all are sold for the same price—$10 per budgeted sales for the next six months follow (in bracelets): January February March (Actual) (Actual) (Actual) 20,000 26,000 40,000 April May June The concentration of sales before and during May is due to Mother’s Day. Sufficient inven bracelets sold in the following month. Suppliers are paid $4 for a bracelet. 60% of a month’s purchases is paid for in the month are on credit, with no discount, and payable within 15 days. The company has found, how sale. An additional 70% is collected in the following month, and the remaining 10% is col negligible. Monthly operating expenses for the company are given below: Variable: Sales Commisions Fixed: Advertising Rent Salaries Utilities Insurance Depreciation Insurance is paid on an annual basis, in November of each year. The company plans to purchase $20,000 in new equipment during May and $60,000 in n declares dividends of $15,000 each quarter, payable in the first month of the following q A listing of the company’s ledger accounts as of March 31 is given below: Assets Cash Accounts Receivable Inventory Prepaid Insurance Property and Equipment (net) Total Assets Liabilities & Stockholders Equity Accounts Payable Dividends Payable Capital Stock Retained Earnings Total Liaibilities & Stockholders Equity The company maintains a minimum cash balance of $50,000. All borrowing is done at th month. (Exception: The company may dip below the $50,000 level in the final month if n The annual interest rate is 17%. Interest is computed and paid at the end of each quarte Requirements: Prepare a master budget for the three-month period ending June 30. Include the following A sales budget, by month and in total. A schedule of expected cash collections from sales, by month and in total. A merchandise purchases budget in units and in dollars. Show the budget by month and i A schedule of expected cash disbursements for merchandise purchases, by month and in A cash budget. Show the budget by month and in total. Determine any borrowing that wo A budgeted income statement for the three-month period ending June 30. Use the contrib A budgeted balance sheet as of June 30. Handing in the Project: This project must be submitted electronically by April 14th, at 11:59 PM. Please drop original folder where you found this assignment. You must save your files with the follow Example - "zlh2 - Lebo.xls" & "zlh2 - Lebo.ppt" . If you are using office 2007, please convert all documents to xls and ppt format. DO NOT Excel Requirements: Due to the nature of this project, most points will be awarded for the ability to produce a you do not understand how to link sheets, please see a TA or attend an excel review sess Begin by producing an input page with all the information from the instructions. Name ea make it identification of cells easier for TA's. Example - Click cell D13 on the instructions sheet. In the upper-lefthand box in excel (the any time you type "=January_Sales", that value will appear. After creating the input page, you will link the budget sheets you have been given, to the sheet may not contain any hard-coded numbers. you do not understand how to link sheets, please see a TA or attend an excel review sess Begin by producing an input page with all the information from the instructions. Name ea make it identification of cells easier for TA's. Example - Click cell D13 on the instructions sheet. In the upper-lefthand box in excel (the any time you type "=January_Sales", that value will appear. After creating the input page, you will link the budget sheets you have been given, to the sheet may not contain any hard-coded numbers. You may link cells on each budget to eachother and between the budgets but you may n the financing section of budget 3. It is possible to create an If Statement to solving for fin necessary. Make sure that you use a formula to determine the interest amount. PowerPoint Requirements: Perform analysis to determine the state of the company. Based on the budgets you creat financing), and inventory. Each analysis should include your thoughts as well as a chart o Powerpoint Presentations should be limited to less than 10 slides and should resemble so Introduction Sales Net Income Cash Inventory Overall Health of the company Conclusions Please limit text on the slides to just bullet points. In-depth conclusions can be formulated Extra Credit: You may choose to present your powerpoint presentation in optional sections during the f Please notify your TA upon completion of the project and leave a note with your project if Lebo & Co., a distributor of bracelets to various retail outlets located in shopping malls across the way of budgeting and at certain times of the year has experienced a shortage of cash. o prepare comprehensive budgets for the upcoming second quarter in order to show management the rogram. To this end, you have worked with accounting and other areas to gather the information for the same price—$10 per bracelet. Actual sales of bracelets for the last three months and : (Budgeted) (Budgeted) (Budgeted) 80,000 60,000 30,000 July August September (Budgeted) (Budgeted) (Budgeted) 30,000 20,000 15,000 Mother’s Day. Sufficient inventory should be on hand at the end of each month to supply 50% of the ases is paid for in the month of purchase; the other 40% is paid for in the following month. All sales The company has found, however, that only 20% of a month’s sales are collected in the month of and the remaining 10% is collected in the second month following sale. Bad debts have been w: 10% of Sales $150,000 $15,000 $100,000 $8,000 $4,000 $15,000 ear. during May and $60,000 in new equipment during June; both purchases will be for cash. The company first month of the following quarter. given below: $74,000 $346,000 $104,000 $21,000 $950,000 $1,495,000 y $100,000 $15,000 $800,000 $580,000 $1,495,000 0. All borrowing is done at the beginning of a month; any repayments are made at the end of a 0 level in the final month if necessary, but only for the amount due in interest expenses.) aid at the end of each quarter on all loans outstanding during the quarter. June 30. Include the following detailed budgets: h and in total. w the budget by month and in total. purchases, by month and in total. rmine any borrowing that would be needed to maintain the minimum cash balance of $50,000. ding June 30. Use the contribution approach. , at 11:59 PM. Please drop your two assignments (the excel document and the power point) in the ave your files with the following title to receive any credit. yournetd - "Company Name". xls and ppt format. DO NOT leave anything in xlsx, or pptx or they will not be graded. d for the ability to produce a neat, and well linked spreadsheet with the correct LINKED formulas. If r attend an excel review session to attain maximum points. m the instructions. Name each cell that you will be using on the input page with descript titles to er-lefthand box in excel (the "Name Box") you will see that it has been labeled "January_Sales" Now s you have been given, to the input page to produce your budget. All worksheets beyond the input r attend an excel review session to attain maximum points. m the instructions. Name each cell that you will be using on the input page with descript titles to er-lefthand box in excel (the "Name Box") you will see that it has been labeled "January_Sales" Now s you have been given, to the input page to produce your budget. All worksheets beyond the input n the budgets but you may not input a number manually. The only exception to this rule will occur in If Statement to solving for financing terms, however you can manually input numbers here if he interest amount. sed on the budgets you created, what are the current trends in sales, net income, cash (including thoughts as well as a chart or graph to visually support your points. lides and should resemble something close to the following layout. onclusions can be formulated in the notes section in powerpoint optional sections during the final week of classes to earn up to 1 full point added to your final grade. ve a note with your project if you choose to do this. across the . anagement the formation hs and ly 50% of the onth. All sales he month of e been h. The company end of a es.) $50,000. er point) in the me". . D formulas. If ript titles to ry_Sales" Now ond the input ript titles to ry_Sales" Now ond the input le will occur in here if (including ur final grade. Given Information Actual and Budgeted Sales January February March April May June July August September Sales Information Price Per Unit Sales collected in current month sales collected in following month sales collected after two months after sale % of next month's inventory on hand at end of this month cost of purchases purchases paid in same month purchases aid in following month interest rate on loans monthly interest rate Monthly operating expenses Variable: sales commisssions (% of sales) fixed: advertising rent salaries utilities insurance deprectiation Current Balance Sheet assets cash accounts receivable inventory prepaid insurance property and equipment (net) total assets liablities and stockholder's equity accounts payable dividends payable capital stock retained earnings total liabilities and stockholder's equity purchases new equipment (may) new equipment (june) minimum cash on hand Actual Actual Actual Budgeted Budgeted Budgeted Budgeted Budgeted Budgeted $20,000 $26,000 $40,000 $80,000 $60,000 $30,000 $30,000 $20,000 $15,000 $10 20% 70% 10% 50% $4 60% 40% 17% 1.42% 10% $150,000 $15,000 $100,000 $8,000 $4,000 $15,000 $74,000 $346,000 $104,000 $21,000 $950,000 $1,495,000 $100,000 $15,000 $800,000 $580,000 $1,495,000 $20,000 $60,000 $50,000 Lebo & Co.
April a. Sales budget: Budgeted unit sales Selling price per unit Total sales b. Schedule of expected cash collections: February sales March sales April sales May sales June sales Total cash collections c. Budgeted merchandise purchases: Budgeted unit sales Add desired ending inventory Total needs Less beginning inventory Required purchases Cost of purchases d. Expected cash payments for merchandise purchases: Accounts payable April purchases May purchases June purchases Total cash payments 80,000 $10 $800,000 $26,000 $280,000 $160,000 $466,000 80,000 30,000 110,000 26,000 84,000 $336,000 $100,000 $201,600 $301,600 o.
May 60,000 $10 $600,000 June 30,000 $10 ### $300,000 Quarter 170,000 $10 $1,700,000 $40,000 $560,000 $120,000 $720,000 $80,000 $420,000 $60,000 $560,000 $26,000 $320,000 $800,000 $540,000 $60,000 $1,746,000 60,000 15,000 75,000 30,000 45,000 $180,000 30,000 15,000 45,000 15,000 30,000 $120,000 170,000 15,000 185,000 26,000 159,000 $636,000 $134,400 $108,000 $242,400 $72,000 $72,000 $144,000 ### $100,000 $336,000 $180,000 $72,000 $688,000 Lebo & Co. Cash Budget For the Three Months Ending June 30
Cash balance Add collections from customers Total cash available Less disbursements: Merchandise purchases Advertising Rent Salaries Commissions Utilities Equipment purchases Dividends paid Total disbursements Excess (deficiency) of receipts over disbursements Financing: Borrowings Repayments Still Oustanding Interest Total financing Cash balance, ending April $74,000 $466,000 $540,000 $301,600 $150,000 $15,000 $100,000 $80,000 $8,000 $15,000 $669,600 $(129,600) 179,600 0 179,600 0 179,600 $50,000 May $50,000 $720,000 $770,000 $242,400 $150,000 $15,000 $100,000 $60,000 $8,000 $20,000 $595,400 $174,600 June $50,000 $560,000 $610,000 $144,000 $150,000 $15,000 $100,000 $30,000 $8,000 $60,000 $507,000 $103,000 -124,600 55,000 -124,600 $50,000 -53,000 2,000 -5,868 -58,868 $44,132 Quarter $74,000 $1,746,000 $1,820,000 $688,000 $450,000 $45,000 $300,000 $170,000 $24,000 $80,000 $15,000 $1,772,000 $48,000 $179,600 $(177,600) $2,000 $(5,868) $(3,868) $44,132 ### Lebo & Co. Budgeted Income Statement For the Three Months Ended June 30
Sales revenue Less variable expenses: Cost of goods sold Commissions Contribution margin Less fixed expenses: Advertising Rent Salaries Utilities Insurance Depreciation Net operating income Less interest expense Net income $1,700,000 $680,000 $170,000 $850,000 $450,000 $45,000 $300,000 $24,000 $12,000 $45,000 $(26,000) $(5,868) $(31,868) Lebo & Co. Budgeted Balance Sheet June 30
Assets Cash Accounts receivable (First establish below) Inventory Prepaid insurance Property and equipment, net Total assets Liabilities and Stockholders’ Equity Accounts payable, purchases Notes payable Dividends payable Capital stock Retained earnings (First Establish below) Total liabilities and stockholders’ equity Accounts receivable at June 30: _% × May sales _% × June sales Total Retained earnings at June 30: Balance, March 31 Add net income Total Less dividends declared Balance, June 30 $44,132 $300,000 $60,000 $9,000 $985,000 $1,398,132 $48,000 $2,000 $15,000 $800,000 $533,132 $1,398,132 $60,000 $240,000 $300,000 $580,000 $(31,868) $548,132 $15,000 $533,132 ...
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This homework help was uploaded on 02/24/2009 for the course AEM 323 taught by Professor As during the Spring '09 term at Cornell University (Engineering School).
- Spring '09