Balance Sheet as of December 31, 2021 (In Millions)
Cash	0.15	Accounts payable	0.17
Accounts receivable	0.47	Capital Lease Liability*	0.14
Inventories	0.55	Total Liabilities	0.31
Net fixed assets*	0.14	Equity	1.00
Total assets	$1.31	Total Liabilities and Equity	$1.31

sales over each quarter of 2022 are forecasted to be:

Sales Forecast (In Millions)
Q1	$ 0.50
Q2	$ 0.75
Q3	$ 0.85
Q4	$ 0.90
Total	$ 3.00

All sales are made on credit terms of net 90 days and are collected the following quarter. No bad debts are anticipated. The accounts receivable on the balance sheet at the end of 2021 thus will be collected in Quarter 1, 2022. Quarter 1, 2022 sales will be collected in Quarter 2, and so on.

Inventory on hand represents a minimum operating level (safety stock), which the company intends to maintain. ALMA.com’s policy is to maintain ending inventory at the end of each quarter equals to 30% of next quarter's expected sales. Purchases are paid 60% in the same quarter and 40% in the next quarter. Cost of goods sold averages 70% of sales (gross profit margin 30%).

General, Administration and Selling cash expenses average 10% of sales. Depreciation is $0.01M per Quarter. The annual interest rate on outstanding lease liability is 5%. Interest expense is paid quarterly. Ms Alma Serah assumes taxes are paid quarterly and the income tax rate is 40% for budgeting purposes. The capital lease installment is 0.08M per Year (0.02 per quarter). There are no additional capital expenditures planned during 2022, and no equity payouts will be paid. The company’s desired end-of- quarter minimum cash balance is $0.15M. Ms Serah hopes to meet any cash shortages during the period by an agreed $0.15M open line of credit with the bank at 4%.

1. Prepare quarterly cash budget for Q1, Q2, Q3, and for Q4 ending December 31, 2022.

2. Prepare the pro forma income statement for the year ending December 31, 2022.

3. Prepare the end of the year 2022 pro forma balance sheet.

Answer rating: 100% (QA)

Answer Quarterly cash budget for Q1 Q2 Q3 and for Q4 ending December 31 2022 1 Cash Budgetin Q1 Q2 Q... View the full answer