Problem 5. (20 Points).

Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted:

	April		May
Sales .	$150,000		$157,500
Merchandise purchases	107,000		112,400
Operating expenses:
Payroll .	13,600		14,280
Advertising .	5,400		5,700
Rent .	2,500		2,500
Depreciation	7,500		7,500
End of April balances:
Cash .	30,000
Bank loan payable	26,000

Additional data:

(1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000.

(2) Purchases are all on credit, with 40% paid in the month of purchase and 60% paid in the following month.

(3) Operating expenses are paid in the month they are incurred.

(4) A minimum cash balance of $25,000 is required at the end of each month.

(5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made at the end of the month if the cash balance exceeds $25,000.

Prepare the company's cash budget for May. Show the ending loan balance at May 31.

Problem 6. (20 Points).

The following information is available for Jergenson Company:

a. The Cash Budget for March shows a bank loan of $10,000 and an ending cash balance of $48,000.

b. The Sales Budget for March indicates sales of $120,000. Accounts receivable is expected to be 70% of March sales.

c. The Merchandise Purchases Budget indicates that $90,000 in merchandise will be purchased in March on account. Ending inventory for March is predicted to be 600 units at a cost of $35 per unit. Purchases on account are paid 100% in the month following the purchase.

d. The Budgeted Income Statement shows depreciation expense of $4,000, net income of $44,000 and $21,000 in income tax expense for the quarter ended March 31. Accrued taxes will be paid in April.

e. The Balance Sheet for February 28 shows equipment of $77,000 with accumulated depreciation of $28,000, common stock of $25,000 and retained earnings of $8,000. There are no changes budgeted in the equipment or common stock accounts for March

Prepare a budgeted balance sheet as of March 31.