Cash Budget
Sales for Blue Bill Corporation are projected as follows for the months of June through November:
June
July
August
September
October
November
$200,000
200,000
200,000
300,000
500,000
200,000
Credit sales account for 70% of the monthy sales and are collected one month after the sale.
Other receipts for October are $50,000.
Variable disbursements are 60% of sales each month.
Fixed disbursements are $10,000 each month.
$80,000 should be included in August for taxes.
The company is obligated to make a $400,000 debt repayment in November.
Beginning cash in June is $50,000.
Desired ending cash each month is $10,000.
Complete the monthly cash budget for Blue Bill Corporation for June through November.
Blue Bill Corporation
Cash Budget
Sales
Cash sales
Collections
Other Receipts
Total cash receipts
Variable disbursements
Fixed disbursements
Other disbursements
Total cash disbursements
June
$200,000
60,000
-
July
$200,000
60,000
140,000
August
September
$200,000
$300,000
60,000
90,000
140,000
140,000
60,000
200,000
200,000
230,000
120,000
10,000
120,000
10,000
180,000
10,000
130,000
130,000
120,000
10,000
80,000
210,000
190,000
Net change during the month
(70,000)
70,000
(10,000)
40,000
Beginning cash
Ending cash
Required cash
Excess cash to invest
Cash borrowed
50,000
(20,000)
10,000
(20,000)
50,000
10,000
40,000
50,000
40,000
10,000
30,000
40,000
80,000
10,000
70,000
30,000
hrough November:
after the sale.
ough November.
October
November
$500,000
$200,000 These amounts were given
150,000
60,000 The cash sales are 30% of monthly sales because they tell us that credit sa
210,000
350,000 Leave the collections amount blank for June. Collections are credit sales. T
50,000
They tell us Other Receipts for October are $50,000. No other receipts for t
410,000
410,000 Add the totals of cash sales, collections, and other receipts. Do not include
300,000
10,000
310,000
100,000
80,000
180,000
10,000
170,000
120,000
10,000
400,000
530,000
They tell us Variable disbursements are 60% of sales each month
They tell us Fixed disbursements are $10,000 each month
They paid $80,000 in taxes for August and $400,000 debt repayment in No
Add all of the disbursements
(120,000) Subtract the Total Cash Disbursements from the Total Cash Receipts
180,000
60,000
10,000
50,000
Beginning cash in June is $50,000. Then use the Ending Cash amount as th
Net change during the month amount plus Beginning Cash
They tell us Desired Cash is $10,000 so use this amount for each month
Ending Cash minus Required Cash
Cash borrowed would be negative B42 plus B43 for June only. Leave the o
ons are credit sales. They tell us that Credit Sales(Collections) are 70% of monthly sales starting in July. For C
y sales starting in July. For Collections you do not start collecting until after the first month so the first $140,0
irst month so the first $140,000 would not be until July. So leave the Collections amount for June blank. Then
amount for June blank. Then you would take 70% of Sales from the previous month for each Collection amoun
th for each Collection amount. For instance, your Collection amount for September would be $140,000 which i
r would be $140,000 which is 70% of the $200,000 Sales amount for August. Then for the collection amount f
en for the collection amount for October would be $210,000 which is 70% of the Sales amount from Septembe
Sales amount from September. And so on.....
Pro Forma Income Statement and Balance Sheet
Below is the income statement and balance sheet for Blue Bill Corporation for 2013. Based on the historical sta
additional information provided, construct the firm's pro forma income statement and balance sheet for 2014.
Blue Bill Corporation
Income Statement
For the year ended 2013
Revenue
Cost of goods sold
Gross margin
SG&A expense
Depreciation expense
Earnings Before Interest and Taxes (EBIT)
Interest expense
Taxable income
Income Tax Expense
Net income
Dividends
To retained earnings
2012
$60.000
42.000
18.000
6.000
1.800
10.200
1.500
8.700
3.045
5.655
750
$4.905
2013
$63.000
44.100
18.900
6.300
2.000
10.600
1.800
8.800
3.080
5.720
800
$4.920
Projected
2014
Additional income statement information:
Sales will increase by 5% in 2014 from 2013 levels.
COGS and SG&A will be the average percent of sales for the last 2 years.
Depreciation expense will increase to $2,200.
Interest expense will be $1,900.
The tax rate is 35%.
Dividend payout will increase to $850.
Blue Bill Corporation
Balance Sheet
December 31, 2013
2013
Current assets
Cash
Accounts receivable
Inventory
Total current assets
Property, plant, and equipment (PP&E)
Accumulated depreciation
Net PP&E
Total assets
Current liabilites
Accounts payable
$8.000
3.150
9.450
20.600
28.500
16.400
12.100
$32.700
$3.780
Projected
2014
Bank loan (10%)
Other current liabilities
Total current liabilities
Long-term debt (12%)
Common stock
Retained earnings
Total liabilities and equity
3.200
1.250
8.230
4.800
1.250
18.420
$32.700
Additional balance sheet information:
The minimum cash balance is 12% of sales.
Working capital accounts (accounts receivable, accounts payable, and inventory) will be the same percent of s
$8,350 of new PP&E will be purchased in 2014.
Other current liabilities will be 3% of sales in 2014.
There will be no changes in the common stock or long-term debt accounts.
The plug figure (the last number entered that makes the balance sheet balance) is bank loan.
Cash Budget
Sales for Blue Bill Corporation are projected as follows for the months of June through November:
June
July
August
September
October
November
$200,000
200,000
200,000
300,000
500,000
200,000
Credit sales account for 70% of the monthy sales and are collected one month after the sale.
Other receipts for October are $50,000.
Variable disbursements are 60% of sales each month.
Fixed disbursements are $10,000 each month.
$80,000 should be included in August for taxes.
The company is obligated to make a $400,000 debt repayment in November.
Beginning cash in June is $50,000.
Desired ending cash each month is $10,000.
Complete the monthly cash budget for Blue Bill Corporation for June through November.
Blue Bill Corporation
Cash Budget
June
Sales
Cash sales
Collections
Other Receipts
Total cash receipts
Variable disbursements
Fixed disbursements
Other disbursements
Total cash disbursements
Net change during the month
Beginning cash
Ending cash
Required cash
Excess cash to invest
Cash borrowed
July
August
September
hrough November:
after the sale.
ough November.
October
November
Purchase answer to see full
attachment