Write a Memo for the above already solved problem. Memo format should include Executive Summary, Purpose, Strategies to increase cash, Conclusion.

Return to question 1 Janus Products, Inc. is a merchandising company that sells binders, paper, and other school supplies. The company is planning its cash needs for the third quarter. In the past, Janus Products has had to borrow money during the third quarter to support peak sales of back-to-school materials, which occur during August. The following Information has been assembled to assist in preparing a cash budget for the quarter: a. Budgeted monthly absorption costing Income statements for July to October are as follows: 6 points July $160, eee 96,000 64.ee August $190,00 114,000 76,000 September $170, eee 182,00 68,000 October $165, eee 99,000 66, eee Sales Cost of goods sold Gross margin Selling and administrative expenses: Selling expense Administrative expense* Total selling and administrative expenses Net operating income 28, see 22,400 51, 20e $ 12, Bee 32,300 28,800 61,1ee $ 14,900 28, 90e 20,400 49,300 $ 18,700 26, 4ee 23,100 49,500 $ 16,500 *Includes $2.000 depreciation each month. Return to question 1 6 points b. Sales are 20% for cash and 80% on credit. C. Credit sales are collected over a three-month period, with 10% collected in the month of sale, 70% In the month following sale, and 20% In the second month following sale. May sales totalled $102,000, and June sales totalled $108,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's Inventory purchases are paid for in the month of purchase. The remaining 50% are paid in the following month. Accounts payable for inventory purchases at June 30 total $35,100. e. The company maintains its ending Inventory levels at 75% of the cost of the merchandise to be sold in the following month. The merchandise Inventory at June 30 is $54,000. f. Land costing $7,500 will be purchased in July g. Dividends of $7,000 will be declared and paid in September. h. The cash balance on June 30 is $20.000; the company must maintain a cash balance of at least this amount at the end of each month 1. The company has an agreement with a local bank that allows it to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $40,000. The Interest rate on these loans Is 1% per month, and for simplicity, we will assume that Interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. The company's president is interested in knowing how reducing Inventory levels and collecting accounts receivable sooner will Impact the cash budget. He revises the cash collection and ending Inventory assumptions as follows: a. Sales continue to be 20% for cash and 80% on credit. However, credit sales from July, August, and September are collected over a three-month period, with 25% collected in the month of sale, 60% collected in the month following sale, and 15% In the second month following sale. Credit sales from May and June are collected during the third quarter using the collection percentages specified in the main section. b. The company maintains its ending Inventory levels for July, August, and September at 25% of the cost of merchandise to be sold in the following month. The merchandise inventory on June 30 remains $54,000, and accounts payable for Inventory purchases on June 30 remain $35,100. Return to question 1 1. Using the president's new assumptions in (1) above, prepare a schedule of expected cash collections for July, August, and September and for the quarter in total. 6 points Answer is complete and correct. JANUS PRODUCTS, INC. Schedule of Expected Cash Collections July August September Quarter Cash sales $ 32.000$ 38,000 $ 34.000 $ 104,000 Credit sales May 16,320 0 0 16,320 June 60.480 17.280 0 77.780 July 32.000 78.800 19,200 128.000 August 00 38.000 91.200 129.200 September 0 0 34.000 34,000 Total cash collections $ 140,800 $ 170.080 $ 178,400 $ 489 280 Return to question 1 2. Using the president's new assumptions in (2) above, prepare the following for merchandise Inventory: 2 ) a. A merchandise purchases budget for July, August, and September 6 points Answer is complete and correct. JANUS PRODUCTS, INC Merchandise Purchases Budget July August September Budgeted cost of goods sold $ 98.000 $ 114.000 $ 102.000 Add: Desired ending inventory 28.500 25.500 24.750 Total needs 124,500 130,500 126.750 Deduct: Beginning inventory 54.000 28.500 25.500 Required inventory purchases $ 70,500 $ 111.000 $ 101.250 b. A schedule of expected cash disbursements for merchandise purchases for July August, and September and for the quarter in total. Answer is complete and correct. JANUS PRODUCTS, INC. Schedule of Expected Cash Disbursements July August September Acoounts payable, June 30 35.100 0 July purchases 35,250 35,250 August purchases 0 55,500 55.500 September purchases 0 0 50.625 Total cash disbursements 70.350 90.750 108,125 Quarter 35.100 70 500 111,000 50.625 287 225 Return to ques 1 3. Using the president's new assumptions, prepare a cash budget for July August, September, and for the quarter in total. (Any "Repayments" and "Interest" should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.) 6 points Answer is complete and correct. JANUS PRODUCTS, INC. , Cash Budget For the Quarter Ended September 30 July August September Quarter $ 20.000 $ 33,7505 53.990s 20.000 140.800 170,080 178.400 489,280 203,830 232,380 509,280 160.800 Cash balance, beginning Add: Collections from sales Total cash available Deduct: Disbursements: Inventory purchases Selling expenses Administrative expenses Land Dividends 70.350 90.750 28.800 32.300 20.400 28.800 7,500 0 0 0 0 00 127,050 149,850 33.750 53.980 105,125287 225 28.000 90.000 18.400 65,800 0 7.500 7,000 7,000 0 0 437 325 71,955 71,955 160.425 0 Total disbursements Excess deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Cash balance, ending 0 0 0 0 0 0 0 0 0 0 0 71.955$ 71,055 0 0 $ 33.7505 63.9805