ACC 212 - Budgeting Project (only need step 3)

E-Lan Electronics Budgeting Project Step 3 E-Lan Electronics expects the following as pertaining to the capital expenditures and cash budgets. Capital Expenditures The company plans to purchase selling and administrative equipment totaling $ 180,000 The company plans to purchase Production equipment totaling $ 3,100,000 Both will be purchased at the end of the March from operating cash flow and will not affect depreciation expense for the first quarter. Cash Budget All sales are on credit. The company expects to collect 75% of sales in the month of sale, 22% of sales in the month following the sale, 3% percent will be uncollectable. Accounts receivable at the end of last year totaled $ 1,980,000 This represents the collectable amount of December sales. The company give credit terms of 2 / EOM, n/EOM second month 70% of purchases in the month of All direct materials purchases are on credit. The company expects to purchase and 30% the following month. Accounts Payable to be paid in January is $ 1,640,000 The company has a credit line of $3,000,000 for operations with an interest rate of 12% APR. At the end of every month, the cash balance should be a minimum of $50,000. The cash budget should include an estimate of amounts to be borrowed or returned to the credit line, and an estimated balance of the credit line. normas The Credit line has a balance at the end of December of $ 362,000 The company has good cred can borrow funds on a secured basis at 4% but has not done so. Mai E-Lan Electronics Budgeting Project Step3 (page 2) E-Lan Electronics expects the following Selling and Administrative Expenses Salaries $ 15,000 Rent $ 17,000 Advertising $ 82,000 Depreciation $ 18,500 Other $ 6,700 Sales Commissions $ 1.50 Per Unit Interest 12% annual rate. Paid on last month 1. Prepare a Selling and Administrative Budget 2. Prepare a capital expenditures budget 3. Prepare a cash budget al Anting 4. What Problems exists in regards to the operating line? What is the cause? What should be done to remedy the situation? (Cost of Goods Sold should be calculated based on estimated costs of production for the quarter.) E-Lan Electronics Budgeting Project Step 3 E-Lan Electronics expects the following as pertaining to the capital expenditures and cash budgets. Capital Expenditures The company plans to purchase selling and administrative equipment totaling $ 180,000 The company plans to purchase Production equipment totaling $ 3,100,000 Both will be purchased at the end of the March from operating cash flow and will not affect depreciation expense for the first quarter. Cash Budget All sales are on credit. The company expects to collect 75% of sales in the month of sale, 22% of sales in the month following the sale, 3% percent will be uncollectable. Accounts receivable at the end of last year totaled $ 1,980,000 This represents the collectable amount of December sales. The company give credit terms of 2 / EOM, n/EOM second month 70% of purchases in the month of All direct materials purchases are on credit. The company expects to purchase and 30% the following month. Accounts Payable to be paid in January is $ 1,640,000 The company has a credit line of $3,000,000 for operations with an interest rate of 12% APR. At the end of every month, the cash balance should be a minimum of $50,000. The cash budget should include an estimate of amounts to be borrowed or returned to the credit line, and an estimated balance of the credit line. normas The Credit line has a balance at the end of December of $ 362,000 The company has good cred can borrow funds on a secured basis at 4% but has not done so. Mai E-Lan Electronics Budgeting Project Step3 (page 2) E-Lan Electronics expects the following Selling and Administrative Expenses Salaries $ 15,000 Rent $ 17,000 Advertising $ 82,000 Depreciation $ 18,500 Other $ 6,700 Sales Commissions $ 1.50 Per Unit Interest 12% annual rate. Paid on last month 1. Prepare a Selling and Administrative Budget 2. Prepare a capital expenditures budget 3. Prepare a cash budget al Anting 4. What Problems exists in regards to the operating line? What is the cause? What should be done to remedy the situation? (Cost of Goods Sold should be calculated based on estimated costs of production for the quarter.)