04 Jun CONSTRUCT ALPHA’S CASH BUDGET, INCOME STATEMENT, BALANCE SHEET AND STATEMENT OF CASH FLOW FOR APRIL 2008.
The sales of Alpha Company in March were $92,000. The Balance sheet of Alpha Company (31 March 2008) is given below.
Current Assets:
Cash 23,000
Accounts receivable 27,600
Merchandise inventory 93,200
Unexpired insurance 4,140
Total Current Assets 147,940
Gross fixed assets 85,100
Accumulated depreciation -29,440
Net Fixed assets 55,660
Total Assets 203,600
Current Liabilities
Accounts payable 27,664
Accrued wages and commissions payable 5,835
Loan 0
Total Current Liabilities 33,499
Owner’s equity 170,101
Total equity and liabilities 203,600
•The projected sales in April and May are $110,000 and $184,000 respectively.
•Alpha sales are 70% cash and 30% credit, collected in the following month. It has no currently overdue accounts and anticipates none in the future.
•The company will purchase a second hand truck on 1 May 2008: $8,000
•Miscellaneous cash expenses: 5% of the current sales
•Rent: $4,600/month
•Insurance expense: paid once a year (beginning of January 2008) = $5,520;
•Depreciation expense: $1,150/month
•Tax rate: 0%
•Wages: $5650/month + 15% commission of sales/month
•70% of the wages made in a specific month are paid in that month, the rests are paid in the following month)
•The inventory policy of the company is to begin a month with a sufficient inventory to cover 80% of sales + $36,000 cushion
•Cost of Goods Sold: 65% of sales
•60% of the purchases made in a specific month are paid in that month, the rests are paid in the following month).
•Alpha borrowed from one of its founder at 1.5% interest/month for the next 2 years. Alpha borrows from and repays the founder at the end of the month. The agreement with this founder stipulates a $30,000 minimum cash balance in the venture’s checking account.
Construct Alpha’s cash budget, income statement, balance sheet and statement of cash flow for April 2008.
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