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.