Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the...

    
 
 

 

Transcribed Image Text:

Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800 Bright World LLC (BW) distributes sunglasses to small retail stores in the Midwest part of the United States. BW does not manufacture the sunglasses, but instead buys the sunglasses from foreign sources and resells the sunglasses to small retail stores. It is December of 2020 and you have been hired as BW's Budget Manager. BW's President, Gary Christens, has asked you to prepare a master budget for 2021. You have gathered the following information and are ready to begin preparing the budget. Sales Information for BW: Actual sales 2020 1st quarter 2nd quarter 3rd quarter 4th quarter Forecasted sales 2021 1st quarter 2nd quarter 3rd 4th quarte quarter 1st quarter 2022 Pairs of Sunglasses sold 70,000 94,000 36.000 40,000 Your specific Input Your specific Input Your specific Input Your specific Input 58.000 Shipping firms and U.S. Customs have previously delayed sunglass shipments arriving from the foreign manufacturers. BW management has addressed this concern by establishing a policy that the ending inventory for a quarter should be 50% of the next quarter's sales. All sunglasses are sold for $14 per pair. All sales are on credit with no discount, and are payable in 30 days. BW has found that only 20% of a quarter's sales are collected in the quarter of sale, with an additional 60% collected in the quarter following the sale, and the remaining 20% is collected in the second quarter following the sale. Bad debts have been insignificant and are not budgeted. BW buys sunglasses from foreign suppliers. BW pays $6 per pair of sunglasses. 40% of a quarter's purchase is paid for in the quarter of purchase, the other 60% is paid for in the quarter following the quarter of purchase. BW plans to purchase new computer equipment costing $30,000 during the second quarter of 2021 and a new packing machine for $40,000 during the 3rd quarter of 2021. Both of these equipment purchases will for cash at the time of the purchase. BW has a regular dividend pattern which is expected to continue during 2021. This pattern involves BW's board of directors declaring a $25,000 quarterly dividend on March 15th, June 15th, September 15th and December 15th. The dividends are paid 30 days after the board's declaration. Operating Expenses expected for 2021: Operating Expenses expected for 2021-accrual based Variable Expenses: Sales Commission Fixed Expenses: Advertising Rent Salaries Utilities Insurance Depreciation (includes the projected 2021 purchases) 1st Quarter 5% of sales revenue $180,000 $20,000 $113,000 $9,000 $6,000 $14,000 2nd Quarter 5% of sales revenue $200,000 $20,000 $113,000 $9,000 $6,000 $14,000 3rd Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $15,000 4th Quarter 5% of sales revenue $220,000 $20,000 $120,000 $9,000 $6,000 $16,000 Sales commissions are accrued in the quarter the sales are made, but are paid to the sales staff in the following quarter. Insurance for a twelve month period is prepaid on October 1 of each year. All other expenses are paid in the quarter incurred. The company requires a minimum cash balance of $50,000. All borrowings and repayments are done in even $1,000 increments. All borrowings are done on the first day of the quarter, and repayments are made on the last day of the quarter. Interest for all monies borrowed during a quarter is computed and accrued on the last day of the quarter and paid to the bank in the following quarter. Money borrowed is charged interest at a 7% annual rate. [Borrowing and Interest Example - If BW computes that the company will need to borrow $20,000 for the first quarter, the loan would occur on January 1 and interest expense during the first quarter would be $350 and this interest would be paid to the bank in the second quarter. If in the second quarter, BW determines that it will be able to repay the $20,000 loan, the repayment would occur on the last day of the second quarter or June 30. Interest expense for the second quarter would $350 and this interest would be paid in the third quarter.] Additional information gathered includes the Balance Sheet at year-end 2020 and the 2020 Income Statement. ASSETS: Cash Accounts Receivable Inventory Prepaid Insurance Property & Equipment Accumulated Depreciation Total Assets Sales Cost of Goods Sold: Beginning Inventory Purchases Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Operating Expenses: Advertising Expense Bright World LLC Balance Sheet December 31, 2020 Net Income Liabilities: $74,000 Accounts Payable 548,800 Dividends Payable 187,200 Interest Payable 18,000 Loans Payable 975,000 Commissions Payable (135,000) Total Liabilities Bright World LLC Income Statement Year Ended December 31, 2020 Capital Stock Retained Earnings $1,668,000 Total Liabilities and Stockholder's Equity Rent Expense Salaries Expense Utility Expense Insurance Expense Commission Expense Depreciation Expense Total Operating Expenses Income Before Interest Expense Interest Expense Total Stockholder Equity 2,870,000 210,000 1,207,200 1,417,200 187,200 1,230,000 1,640,000 700,000 72,000 411,000 28,000 24,000 144,000 52,000 1,431,000 209,000 6.700 202,300 184,320 25,000 0 0 28,000 237,320 800,000 630,680 1,430,680 $1,668,000 Beginning Your Budget Project: Unique unit sale information for the first second, third, and fourth quarter of 2021 is available for you on Canvas, in a module titled Budget Project and a file titled 2021 Spring Budget Project Inputs. Insert your unique unit sale information into the sales forecast on page 1 of this document. Please be aware that because of the unique 2021 sale information, the results in your Budget Project will be different from other students. For any questions you have on your Budget Project, please include your unique Budget Project Number listed in the 2021 Spring Budget Project Inputs file. The 2021 Spring Budget Project Inputs file also includes the following check figures: • Total 2021 Cash Collections from Sales, Step 1b. • • Total 2021 Cash Payments for Inventory Purchases, Step 1d. First Quarter 2021 Cash Borrowing on the Cash Budget, Step 1f First Quarter 2021 Ending Cash Balance on the Cash Budget, Step 1f. Total 2021 Net Income, Step 2a. Use the schedule listing below as a guide to work through your Budget Project. All schedules listed below in Number 1, must be prepared by quarter and include an annual total column. For all schedules in number 1 and 2 below round amounts to the nearest dollar. Display dollar amounts for Number 1 and 2 below with a coma separating the dollar amounts and with NO cents listed. This means that your schedules for number 1 and 2 below should NOT show cents, including zeros on your schedules. A figure of 123000.00 is not acceptable. This figure should be displayed as 123,000. For all calculations in number 3, calculations should be to 3 places after the decimal point. Problem 8-29 in the book and the pages referenced below are ONLY EXAMPLES. DO NOT use Problem 8-29 or the book references as copy and insert the number. You need to use the assumptions of this Budget Project to prepare a schedule that fits the facts of the 2021 Budget you are preparing. 1) Prepare the following budget schedules for 2021, by quarter with a total 2021 column. a) A sales budget. See page 363. b) A schedule of expected cash collections from sales. See page 363. c) A merchandise purchases budget in units and in dollars. See the information on page 365 that is titled "Inventory Purchases - Merchandising Company. The book mentions that a purchases budget can be prepared in dollars and in units. I would suggest preparing your merchandise purchase in units and when the units have been determined, multiple the units time the purchase price. d) A schedule of expected cash disbursements for merchandise purchases. e) A selling and administrative expense budget. See page 371 and the video on Canvas. f) A cash budget including borrowings and loan repayments. See page 373 and the video on Canvas for the interest calculation 2) Prepare the following budget schedules. The Income Statement and Balance Sheet must have the same format and detail that the 2020 financial statements include. (shown above) a) A budgeted Income Statement for the year-end December 31, 2021. b) A budgeted Balance Sheet for December 31, 2021. 3) Additional analysis information including (show computations): a) Break-Even in units and Break-Even revenue dollars for budget year 2021. b) Margin of Safety for 2021 in total dollar amount and percentage. c) Contribution Margin Ratio for 2021. d) Any additional analysis that you have calculated (Optional). 2021 Spring Budget Project Sec 802 Specific Input and Check Figures Name Lawrence Arndt Robert Baker Mackensie Bolssen Sierra Collins Canyon Covert Blake Derricks Aurora Dorado Peyton Dorn Kyndall Haddock Alisha LaPean Apimuk Lertsakornsiri Adalia Marshall Maddy McCallum Dorothy Mifflin Martin Morales Nickolas Olp Max Paider Daniel Pointer Lizzy Rindt Madeline Sabel Isaiah Schaefer Taylor Schlomann Justin Sonnentag Jay Strieby Alex Taylor Eric Tischauser Cameron VanCamp Trevor Wisse Michael Wong Your Budget Project Number 1 30 2 29 3 28 4 27 5 26 6 25 7 24 8 23 9 22 10 21 11 20 12 19 13 18 14 17 15 2021 1st Quarter Unit Sales 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 62,400 2021 2nd 2021 3rd Quarter Unit Quarter Unit Sales Sales 90,000 66,000 89,000 66,500 88,000 67,000 38,000 32,200 37,800 32,400 37,600 32,600 37,400 32,800 37,200 33,000 37,000 33,200 84,000 36,800 69,000 33,400 83,000 36,600 69,500 33,600 87,000 67,500 86,000 68,000 85,000 68,500 BUDGET INPUTS 82,000 70,000 81,000 70,500 80,000 71,000 79,000 72,000 78,000 73,000 77,000 74,000 76,000 36,400 33,800 36,200 34,000 36,000 34,200 35,800 34,400 35,600 34,600 35,400 34,800 35,200 2021 4th Quarter Unit Sales 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 43,200 39,000 40,000 39,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Total 2021 Cash Collections from Sales Total ZUZI Cash Payments for Inventory Purchases 3,228,960 1,390,560 2,816,240 1,194,120 3,212,720 1,383,360 2,825,480 1,198,320 3,196,480 1,376,160 2,834,720 1,202,520 3,180,240 1,368,960 2,843,960 1,206,720 3,164,000 1,361,760 2,853,200 1,210,920 3,147,760 1,354,560 2,862,440 1,215,120 3,131,520 1,347,360 2,871,680 1,219,320 3,115,280 1,340,160 2,880,920 1,223,520 3,099,040 1,332,960 2,890,160 1,227,720 3,073,840 1,312,320 2,899,400 1,231,920 3,057,600 1,305,120 2,911,440 1,240,320 3,041,360 1,297,920 2,927,680 1,247,520 3,025,120 1,290,720 2,943,920 1,254,720 3,008,880 1,283,520 2,960,160 1,261,920 2,992,640 1,276,320 CHECK FIGURES First Quarter 2021 Cash Borrowings on the Cash Budget 107,000 78,000 106,000 79,000 105,000 80,000 104,000 80,000 102,000 81,000 101,000 81,000 100,000 82,000 99,000 83,000 98,000 83,000 96,000 84,000 95,000 84,000 94,000 86,000 93,000 87,000 92,000 88,000 90,000 First Quarter 2021 Ending Cash Balance on the Cash Budget 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,520 50,720 50,920 50,920 50,320 50,120 50,720 50,320 50,120 50,520 50,920 50,720 50,720 50,920 50,520 50,120 Total 2021 Net Income on the Income Statement 214,976 (33,135) 206,270 (28,009) 197,579 (22,863) 188,872 (17,701) 180,217 (12,556) 171,526 (7,394) 162,820 (2,248) 154,129 2,878 145,440 8,059 113,407 13,187 104,716 25,632 96,027 34,427 87,319 43,291 78,595 52,122 69,800