Course Project

Earrings Unlimited

1

a Sales budget

April May June Total

Sales (units) 65,000 100,000 50,000 215,000

Sales (dollars) $650,000 $1,000,000 $500,000 $2,150,000

b Cash collections from sale

April May June Total

February sales $26,000 $26,000

March sales $280,000 $40,000 $320,000

April sales $130,000 $455,000 $65,000 $650,000

May sales $200,000 $700,000 $900,000

June sales $100,000 $100,000

Total collections $436,000 $695,000 $865,000 $1,996,000

c Merchandise purchase budget

April May June Total

In units

Desired ending inventory 40,000 20,000 12,000 72,000

Add: Sales during the month 65,000 100,000 50,000 215,000

Less: Opening inventory (26,000) (40,000) (20,000) (86,000)

Purchases 79,000 80,000 42,000 201,000

Purchases (in dollars) @$4 per unit $316,000 $320,000 $168,000 $804,000

d Cash disbursement for purchases

April May June Total

March purchases $100,000 $100,000

April purchases $158,000 $158,000 $316,000

May purchases $160,000 $160,000 $320,000

June purchases $84,000 $84,000

Total disbursements $258,000 $318,000 $244,000 $820,000

2 Cash budget

April May June Total

Beginning cash balance $74,000 $50,000 $50,000 $74,000

Receipts from customers $436,000 $695,000 $865,000 $1,996,000

Total cash $510,000 $745,000 $915,000 $2,070,000

Cash disbursements:

To vendors for purchases $258,000 $318,000 $244,000 $820,000

Sales commissions $26,000 $40,000 $20,000 $86,000

Advertising $200,000 $200,000 $200,000 $600,000

Rent $18,000 $18,000 $18,000 $54,000

Salaries $106,000 $106,000 $106,000 $318,000

Utilities $7,000 $7,000 $7,000 $21,000

Purchase of new equipment $- $16,000 $40,000 $56,000

Payment of dividends $15,000 $- $- $15,000

Interest on borrowings $- $- $5,300 $5,300

Total disbursements $630,000 $705,000 $640,300 $1,975,300

Excess(Deficiency) of Cash Available $(120,000) $40,000 $274,700 $94,700

Financing:

Cash Borrowed $170,000 $10,000 $- $180,000