NAME:

TAKE HOME PROBLEM $-$ FALL $2024$

DUE CLASS TIME, NOV $6$

You are the Business Manager of Garden Sales, Inc and the bank has asked you to prepare a cash and earnings udget$/$forecast and Pro$-$Forma Balance Sheet and Income Statement for the next quarter. After your discussion with he various departments, you have come up with the following information$/$assumptions:

$-$ November $2022$ and December $2022$ sales were $\backslash$$$105,000,$ each month

$-$ Sales for the following three months will decrease by $\backslash (\backslash$$ $2,000\backslash )$ each month, beginning January through April.

$-$ Cost of Goods Sold represents $\backslash (60\backslash \%\backslash )$ of sales, each month.

$-$ Cash Operating Expenses are $25\backslash \%$ of sales, exclusive of Depreciation expense

$-$ Depreciation Expense is $\backslash (\backslash$$ $2,000\backslash ),$ per month and prepaid rent is amortized at $\backslash (\backslash$$ $1,200\backslash )$ per month

$-$ Of the month's sales, $\backslash (30\backslash \%\backslash )$ is collected as cash with the remaining placed on customer's account.

$-$ Customer's accounts are usually paid off over a $2$ month period $(\backslash (50\backslash \%\backslash )$ each month$)$ beginning the month following the sale

$-$ The CFO just informed you that one customer has filed bankruptcy therefore, $\backslash (\backslash$$ $3,500\backslash )$ from Nov A$/$R Sales will be written off in Jan to Bad Debt Exp.

$-$ To maintain sufficient inventory, the company purchases $\backslash (100\backslash \%\backslash )$ of the next month's cost of goods sold. They pay for $\backslash (60\backslash \%\backslash ),$ in cash, in the month they purchase and pay the remaining $\backslash (40\backslash \%\backslash )$ in the following month.

$-$ In March, the company is planning on replacing an outdated machine. The new machine will cost $\backslash (\backslash$$ $35,000\backslash ).$ The old machine originally cost $\backslash (\backslash$$ $12,000\backslash ),$ with a Net Book Value of $\backslash (\backslash$$ $5,000\backslash )$ and will be sold for $\backslash (\backslash$$ $3,000\backslash ).$

$-$ The Company does not pay or accrue for taxes until the end of December.

$-$ The Company plans to pay a cash dividend of $\backslash (\backslash$$ $2,000\backslash )$ at the end of March.

$-$ Assume all operating expenses incurred during the month are paid, in cash, during the same month incurred

$-$ The Note Payable requires a principal payment of $\backslash (\backslash$$ $8,300\backslash ),$ plus interest of $\backslash (\backslash$$ $825\backslash ),$ at the end of March. For this note, no interest is Accrued$/$Expensed until interest is paid

$-$ The minimum cash month end balance required according to the bank agreement is $\backslash (\backslash$$ $60,000\backslash )$ for any given month beginning Jan $31,2023.$

$-$ A working capital line of credit is available, up to $\backslash (\backslash$$ $50,000\backslash ),$ and if needed, money is taken out at the beginning of the month. Interest is $\backslash (1\backslash \%\backslash )$ per month.

$-$ Interest is paid on the working capital line when principal payments are paid on the debt; at the end of any given month.

$-$ Interest is accrued on the working capital line effective the beginning of the month when money is received.

$1.$ Prepare a detailed Cash Budget$/$Forecast for each month of Jan, Feb and March, $2023$

$2.$ Prepare an Income Statement for each period Jan$-$Mar $2023($in good form$)$

$3.$ Prepare a Balance Sheet as of March $31,2023($in good form$)$

$4.$ Although you may use Excel, this assignment must be turned in as a HAND$-$WRITTEN document.

This sheet must be turned in with your assignment. No exceptions.

Check Figures for $03/31$

Net Income $(3$mo$)\backslash$$$29,361\mathrm{.}66$

Total Assets $\backslash$$$1,055,250\mathrm{.}00$