ACCOUNTING-Given Data CRAVAT SALES COMPANY

								Given Data

								CRAVAT SALES COMPANY

CRAVAT SALES COMPANY		Minimum ending cash balance		$ 10,000
Budgets		Selling price (per unit)			$ 8.10

			April	May	June	Quarter			Recent and forecast sales (in units):
1a. Sales budget:								January (actual)			20,000
Budgeted sales in units		33,000	41,000	65,000	139,000			February (actual)			24,000
Selling price per unit		$ 8.10	$ 8.10	$ 8.10	$ 8.10			March (actual)			28,000
Total sales			$ 267,300	$ 332,100	$ 526,500	$ 1,125,900			April				33,000
				Correct!	Correct!	Correct!			May				41,000
1b. Schedule of expected cash collections:						June				65,000
February sales		$ 19,440			$ 19,440			July				40,000
March sales			136,080	22,680		$ 158,760			August				36,000
April sales			80,190	160,380	$ 26,730	$ 267,300			September				32,000
May sales				99,630	199,260	$ 298,890
June sales					157,950	$ 157,950			Desired ending inventories (percentage		75%
Total cash collections		$ 235,710	$ 282,690	$ 383,940	$ 902,340			of next month’s sales)
			Correct!	Correct!	Correct!	Correct!			Cost of ties (per unit)			$ 4.85
1c. Merchandise purchases budget:
Budgeted sales in units		33,000	41,000	65,000	139,000			Purchases paid as follows:
Add budgeted ending inventory	30,750	48,750	30,000	30,000			In month of purchase			50%
Total needs			63,750	89,750	95,000	169,000			In following month			50%
Less beginning inventory		24,750	30,750	48,750	24,750
Required unit purchases		39,000	59,000	46,250	144,250			Collection on sales:
Unit cost			$ 4.85	$ 4.85	$ 4.85	$ 4.85			Sales collected current month		30%
Required dollar purchases		$ 189,150.00	$ 286,150.00	$ 224,312.50	$ 699,612.50			Sales collected following month		60%
			Correct!	Correct!	Correct!	Correct!			Sales collected 2nd month following		10%
1d. Budgeted cash disbursements for inventory purchases:
March purchases		$ 76,993.75			$ 76,994			Variable monthly expenses:
April purchases		94,575	$ 94,575		$ 189,150			Sales commissions (per tie)		$ 1.00
May purchases			143,075	$ 143,075	$ 286,150
June purchases				112,156.25	112,156.25			Fixed monthly expenses:
Total cash payments		$ 171,568.75	$ 237,650	255,231.25	664,450.00			Wages and salaries			$ 22,000
			Correct!	Correct!	Correct!	Correct!			Utilities				$ 14,000
									Insurance				$ 1,200
2.									Depreciation			$ 1,500
CRAVAT SALES COMPANY		Miscellaneous			$ 3,000
Cash Budget
For the Three Months Ending June 30		Land purchased in May			$ 30,000
									Dividends declared each quarter		$ 12,000
			April	May	June	Quarter
Cash balance, beginning		$ 14,000	$ 12,141.25	$ 12,181.25	$ 38,323			Balance sheet at March 31:
Add receipts from customers	235,710	282,690	383,940	902,340			Assets
Total cash available		249,710	294,831	396,121	940,663			Cash				$ 14,000
Less disbursements:								Accounts receivable
Purchase of inventory		171,568.75	237,650.00	255,231.25	664,450			February sales		$ 19,440
Sales commissions		33,000	41,000	65,000	139,000			March sales		158,760	178,200
Salaries and wages		22,000	22,000	22,000	66,000			Inventory (24,750 units)			120,037.50
Utilities			14,000	14,000	14,000	42,000			Prepaid insurance			14,400
Miscellaneous		3,000	3,000	3,000	9,000			Fixed assets, net of depreciation		172,700
Dividends paid		4,000	4,000	4,000	12,000			Total assets				$ 499,337.50
Land purchases		–	30,000	–	30,000
Total disbursements		247,568.75	351,650.00	363,231.25	962,450			Liabilities and Stockholders’ Equity
Excess (deficiency) of receipts							Accounts payable			$76,993.75
over disbursements		2,141.25	(56,818.75)	32,890.00	(21,788)			Dividends payable			12,000
Financing:									Capital stock			300,000
Borrowings			10,000	69,000	–	79,000			Retained earnings			110,343.75
Repayments		–	–	22,000	22,000			Total liabilities and stockholders’ equity		$ 499,337.50
Interest			–	–	(1,680)	(1,680)
Total financing		10,000	69,000	20,320	55,320			Agreement with Bank:
Cash balance, ending		$ 12,141.25	$ 12,181.25	$ 12,570.00	$ 12,570			Borrowing increments			$ 1,000
			Correct!	Correct!	Try again!	Try again!			Maximum borrowing amount		$300,000
									Interest rate per month			1%
3.									Repayment increments			$ 1,000
CRAVAT SALES COMPANY			Total of interest paid each quarter		100%
Budgeted Income Statement			Required minimum cash balance		$ 12,000
For the Three Months Ended June 30

Sales in units			139,000
Sales				$ 1,125,900
Variable expenses:
Cost of goods sold		$ 699,613
Commissions		139,000	838,613
Contribution margin			287,288
Fixed expenses:
Salaries and wages		66,000
Utilities			42,000
Insurance expired		3,600
Depreciation		4,500
Miscellaneous		9,000	125,100
Net operating income			162,188
Less interest expense			(1,680)
Net income				$ 163,868
				Try again!

4.
CRAVAT SALES COMPANY
Budgeted Balance Sheet
June 30

Assets
Cash
Accounts receivable		24,750
Inventory			30,000
Unexpired insurance
Fixed assets, net of depreciation	1,500
Total assets

Liabilities and Stockholders’ Equity
Accounts payable, purchases	$76,933.75
Dividends payable		12,000
Loans payable, bank		79,000
Capital stock, no par		300,000
Retained earnings
Total liabilities and equity

Accounts receivable at June 30:
May sales			$ 332,100
June sales			526,500
Total

Retained earnings at June 30:
Balance, March 31
Add net income
Total
Less dividends declared
Balance, June 30

ACCOUNTING-Given Data CRAVAT SALES COMPANY

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