Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in...

  

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Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000. Steevan's GPS Company is owned and operated by Steevan Harrland, Sr. The company has been in operation for several years and manufactures GPS devices. The company has been quite successful over the past years but is experiencing a slow decline in profits for the past couple of quarters, according to reports generated by the administrative staff. A month ago, Mr. Harrland's son, Steevan Harrland, Jr, took a leave of absence from the business to attend law school. Steevan, Jr. served as the Chief Financial Officer for the Company but has only worked in the business for 8 months before leaving. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties. The company had been consistently reporting net profits over the years but a decline in profits over the past couple of quarters is quite noticeable. The Harrlands are troubled by this performance and believe they need an expert to review the company's records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy. Two distinct areas that you are currently investigating are manufacturing operations and cash flow management. Details are provided below for both areas. PART TWO Cash flow and Financing Before leaving, Steevan Harrland, Jr., advised his dad that there also is a need for better forecasting regarding the company's cash inflows and outflows. After a series of questions, you determined that (1) the staff had not prepared a cash budget for several quarters and (2) is not up to date on the company's payables and receivables. You are going to prepare a forecasted income statement and a forecasted cash budget for the fourth quarter. Pertinent information needed has been collected and is outlined below. Pertinent Information: The business manager/accountant and Mr. Harrland, Sr. provided projections pertaining to the 4 quarter (October through December 2020) and other pertinent information outlined below: 1. Total sales 3" quarter: 5,200 GPS devices; Sales price is $450/GPS device 2. Total Sales for the 4*quarter are projected to increase 5% above the 3" quarter total sales due to an aggressive marketing program that began September 1, 2020. Total quarter sales per month are expected to be realized as follows: 25% in October, 35% in November, and 40% in December. The sales budgets exspressed In sales dollars and in the number of GPS devices sold are as follows: PROJECTED SALES REVENUE SALES Oct Nov Dec TOTAL QIR S614.250 SS.9s0so 2457.000 SALES PRICE X QUANTITY4250ssss 24S000 Quantity of GPS Divices Sold Nev Dec TOTAL OIR Quantity of GPS Devices Sold 1.65 1911 2.14 5.450 3. Monthly Sales are classified as follows and realized in corresponding percentage: a. Cash sales.. of total sales b. Credit sales.. total sales 28% 72% of 4. Monthly credit sales are collected as follows and in the corresponding proportion: a. Collected in the month of the sale, 40% b. Collected one month after the sale month, 35% c. Collected the second month after the sale month, 25% 5. Cost Classifications based on 3" quarter information: Costs Variable Costs Fixed Costs Raw Materials Used in Manufacturing (See corrected COGS Schedule in Part 1, Required $ ? #1) Actual Costs on 3" Quarter Income Statement 570,000 Direct Labor Factory Overhead: Rent-Factory S 180,000 Indirect Labor 84,000 22,000 Insurance - Factory (66 2/3%) Utility-Factory (75%) Depreciation-factory building 27,000 9,000 91,000 General Administrative Advertising expense Selling & Administrative Wages and Salaries Utility-Selling & Administrative (25%) Insurance-Administrative (33 1/3%) Depreciation-Administrative 270,000 90,000 135,000 8,400 3,600 11,000 135,000 6. All factory overhead and administrative expenses (except depreciation) are paid in cash in the month the cost is incurred. 7. Direct labor is paid at the end of the month 8. Raw material credit purchases (i.e., on account) are paid as follows: 50% in the month of the purchase, 30% the month after the purchase, and 20% in the second month following the purchase. The raw materials' purchases budget is as follows: PROJECTED Oct Dec TOTAL QTR Nov RAW MATERIAL PURCHASES $166,950 $233,730 s267,120 41,738 58,433 $667,800 NEEDED FOR SALES DESIRED ENDING LESS: BEGINNING PURCHASES 66,780 (204,000) (41,738) (58,433) $4,688 $250,425 $275,468 $530,580 9. Additional monthly obligation paid in cash include: a. Property taxes, due November 27, $2,790 b. Employee payroll taxes due December 15, $4,500, REQUIRED: You are to perform the following tasks for the Harrlands: a. Compute the unit cost of goods sold using 3" quarter information and the corrected cost of goods sold statement you prepared in Part One. b. Prepare a projected traditional multi-step income statement for the 4° quarter using information in "a," above and the 3" quarter information on the table in "5" above (see the previous page). For proper formatting, see Exhibit 1 at the end of this document. c. Prepare a schedule of collections from credit sales for each month of the 4 quarter. Relevant prior months' credit sales: August credit sales, $693,300 September credit sales, $624,000 d. Prepare a schedule of payments for raw materials purchased on credit (on account) for each month of the 4 quarter. Relevant prior months' purchases on credit (on account): August purchases on credit (on account), $291,400 September purchases on credit (on account), $265,540 e. Prepare a projected Cash Flow Budget for the 4 quarter. Your budget should include a monthly budget for each of the three months in the quarter. The beginning cash balance on October 1, 2020 is $1,214,000.