Budgeting Project F 2016 For BB PDF

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Professor Brombley...

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ACC/BIS 255 Group # ____

Master Budget CASE Names__________________________

The Chippewa Chocolates (CC) Company began business on January 1, 2015. One year has gone by and the company’s president Tom Hale is trying to prepare a new master budget for the first two months of 2016. Mr. Hale has asked you to help project the budget for these two months. Develop and test the budget model using the assumption data in the file your group downloads from our Blackboard site. Once you have finalized and corrected the model, then incorporate the following values based on the information you have obtained from your BIS255 query. 1)

The average monthly increase in sales as a percentage was.

__________

2)

The projected sales for January was-

__________

3)

The average monthly salary expense was-

$______/month

4)

The average monthly rent expense was-

$______/month

5)

The average monthly utility expense was-

$_____/month

6)

The average monthly misc. expense was-

$_____/month

7)

The supplies expense as a percentage of sales is-

___%

8)

The commission expense as a percentage of sales is-

___%

Also incorporate the assumptions given below and prepare the following budgets for the first two months of 2016 using the Excel spreadsheet provided. Submit your Excel file using the link provided on Blackboard. Prepare the following budgets: 1. Sales Budget and Schedule of Cash Receipts – assuming 20% of total sales will be for cash sales and the rest is credit sales. The company expects to collect 55% of the accounts receivable from credit sales in the month of sale and 45% in the month following the sale. Note: Prepare the sales budget for three months through March. 2. Inventory Purchases Budget and Schedule of Cash Payments – The cost of goods sold is 65% of budgeted sales. The company tries to maintain an ending inventory equal to 20% of the next month’s cost of goods sold. The company is a retailer and does not manufacture any of its inventory. All purchases of inventory are made on account. 60% of the purchases are paid in the month of purchase and 40% are paid in the month following purchase. 3. Selling & Administration Expense Budget with fixed and variable expenses and a Schedule of Cash Payments for S & A Expenses. Utilities and commissions are the only expenses paid in the month following the month incurred. All other expenses are paid when they are incurred. Depreciation expense was $5,000/month in 2014. Straight line depreciation was used. On January 1, 2016 the company plans to purchase new store fixtures for $400,000. They are estimated to have a salvage value of $40,000 and a useful life of 5 years. The funds will be provided from a line of credit from their bank discussed below. 4. A Budgeted Income Statement – Including: a schedule of Cost of Goods Sold, Gross Profit, Selling and Administrative Expenses, Net Operating Income, Interest Expense and Net Income. No dividends have been declared or paid. 5. A Cash Budget – The Company can borrow money from their bank and they must pay interest on the loan at the end of each quarter. The stated rate of interest is 6% per year. They may also repay the principle using any cash available to them on the last day of the month. The company desires to maintain a $60,000 minimum cash balance. The company borrows on the 1st day of the month and repays the bank on the last day of the month. The outstanding balance owed to the bank after February will be refinanced into a three year note payable. 6. The Budgeted Balance Sheet as of February 28, 2016.

Chippewa Chocolates Company Balance Sheet As of December 31, 2015

Assets: Cash in Bank Accts Receivable Cr. Sales Inventory Total Current Assets

$ 62,000 202,140 26,000 $290,140

Buildings & Equipment $540,000 Accumulated Depreciation (60,000) Buildings & Equipment Net $480,000 Land 100,000 Total Fixed Assets 580,000 Total Assets $870,140

Liabilities: Accts. Pay. Inventory Purchases $ 51,200 Accrued liabilities-utilities 2,000 Accrued liabilities -commissions 17,700 Total Current Liabilities $70,900 Stockholder’s Equity Common Stock Retained earnings Total Equity

500,000 299,240

Total Liabilities & Stock Equity

799,240 $870,140...