ACG 3341 Master Budget Project Instructions Universal Electronics is a small, rapidly growing wholesaler of consumer electronic products. The firms main product lines are small kitchen appliances and power tools. The general manager of marketing has completed the sales forecast. She believes the sales during the first quarter of 20x1 will increase by 10% each month over the previous months sales. Then she expects sales to remain constant over the next several months. The companys projected balance sheet as of December 31, 20x0 is as follows:

Cash $28,000

Accounts receivable 276,000

Marketable securities 16,000

Inventory 154,000

Buildings and equipment 626,000

Total assets $ 1,100,000

Accounts payable $ 176,400

Bond interest payable 12,500

Property taxes payable 3,600

Bonds payable (10% due 20x6) 300,000

Common Stock 500,000

Retained earnings 107,500

Total liabilities and stockholders equity $1,100,000

Denise Gelia, the controller, is now preparing the monthly budget for the first quarter of 20x1. In the process, the following information has been accumulated:

1. Projected sales for December 20x0 are $400,000. Credit sales are typically 75% of the total sales. The companys credit experience indicates that 10% of the credit sales is collected during the month of the sale, and the remainder collected the following month.

2. The companys cost of goods sold is generally 70% of sales. Inventory is purchased on account and 40% of each months purchases are paid during the month of the purchase. The remainder is paid during the following month. To have adequate stocks of inventory on hand, the firm attempts to have inventory at the end of each month equal to half of the next months projected cost of goods sold.

3. Denise has estimated the Universal Electronics other monthly expenses will be as follows:

Sales salaries $21,000

Advertising and promotion $16,000

Administrative salaries $21,000

Depreciation $25,000

Interest on bonds $2,500

Property taxes $900 In addition, sales commissions run at the rate of 1% of sales.

4. Universal Electronics president Reggie Shouse has indicated that the firm should invest $125,000 in an automated inventory handling system to control the movement of inventory in the firms warehouse just after the new year begins. The equipment purchase will be funded primarily from the firms cash and marketable securities. However, Shouse believes that the company should keep a minimum cash balance of $19,000. If necessary, the remainder of the equipment purchases will be financed using short-term credit from a local bank. The minimum period for such a loan is three months. Dana believes that the short-term interest rates will be 10% per year at the time of the equipment purchases. If a loan is necessary, Shouse has decided it should be paid off by the end of the first quarter, if possible.

5. Universal Electronics board of directors has indicated its intention to declare and pay dividends of $50,000 on the last day of the first quarter, if possible.

6. The interest on any short-term borrowing will be paid when the loan is repaid. Interest on the companys bonds is paid semi-annually on January 31 and July 31 for the preceding six-month period.

7. Property taxes are paid semiannually on February 28 and August 31 for the preceding six-month period. Prepare Universal Electronics master budget for the first quarter of 20x1 using the template provided in Canvas.

B 02 D E F G H ACG 3341 Excel Project Master Budget The yellow cells are data input' cells in which facts, assumptions or estimates are to be entered. The blue cells are relationship cells in which formulas are to be entered. The green cell aro facts, assumptions or estimates from "data input" cells. Data Input: Projected Balance Sheet as of December 31, 20x0 Cash Accounts receivable Marketable securities Inventory Buildings and equipment (net of depreciation) Total assets Projected sales for December Credit sales percent Percent collected during month of sale Cost of goods sold percent of sales Percent of purchases paid during month of purchase Ending Inventory as percent of next month's Proj. COGS Accounts payable Bond Interest payable Property taxes payable Bonds payable (10%, due in 20x6) Common stock Retained earrings Total liabilities and stockholders' equity Other monthly expenses Sales salaries Advertising and promotion Administrative salaries Depreciation Interest on bonds Property taxes Salon commission, percent of sales Expected montivy increase in sales (1st quarter) Proposed equipment investment Minimum cash balance Minimum time for short-term loan (months) Projected short-term interest rate Proposed dividend payment a. Sales budget First tar Paramhar Fahn March Budget Template + A B D E H 37 8 Sales budget December January February First Quarter March Totes les Cash sales Sales on account b. Cash receipts budget: First January February March Quarter Cash sales Cash collections from credit sales (current month) Cash collections from credit sales (previous month) Total cash receipts c. Purchases udget: 30 31 2 13 4 15 6 17 8 9 0 61 2 3 4 -5 6 7 8 -9 0 51 2 3 -4 5 38 7 8 9 0 *1 2 3 4 December First Quarter January February March Budgeted cost of goods sold Add: Desired ending inventory Total goods needed Less: Expected beginning inventory Purchases d. Cash disbursements budget: First Quarter January February March Inventory purchases: Cash payments for purchases (current month) Cash payments for purchases (previous month) Total cash payments for inventory purchases Other expenses Sales salaries Budget Template Enter x fe A B D E G H Advertising and promotion Administrative salaries Interest on bonds Property taxes Sales commissions Total cash payments for other expenses Total cash disbursements Summary cash budget: First Quarter January February March Cash receipts Cash disbursements Change in cash balance during period due to operations Sale of marketable securities Proceeds from bank loan Purchase of equipment Repayment of bank loan Interest on bank loan Payment of dividends Change in cash balance during first quarter Cash balance, 1/1/x1 Cash balance, 3/31/x 1 f. Analysis of short-term financing needs: Projected cash balance as of December 31, 20x0 Less: Minimum cash balance Cash available for equipment purchases Projected proceeds from sale of marketable securities Cash available Less: Cost of investment in equipment Required short-term borrowing 9 Universal Electronics Budgeted Income Statement for the First Quarter of 20x1 Sales revenue Budget Template + H108 Ex fe A B D E H 9. Universal Electronics Budgeted Income Statement for the First Quarter of 20x1 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 Sales revenue Less: Cost of goods sold Gross margin Selling and administrative expenses Sales salaries Sales commissions Advertising and promotion Administrative salaries Depreciation Interest on bonds Interest on short-term bank loan Property taxes Total selling and administrative expenses Net Income 128 h. Universal Electronics Budgeted Statement of Retained Earnings for the First Quarter of 20x1 Retained eamings, 12/31/x0 Add: Not income Deduct: Dividends Retained earnings, 3311x1 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 Universal Electronics Balance Sheet March 31, 20x1 Cash Accounts receiveable Inventory Buildings and equipment (net of accumulated depreciation) Total assets 145 147 Accounts payable Budget Template H108 X A B D E F G 145 Accounts payable Bond interest payable Property taxes payable Bonds payable Common stock Retained earings Total liabilities and stockholders' equity 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 12