The sales of Alpha Company in March were $92,000. The Balance sheet of Alpha Company (31 March 2008) is given below.
Current Assets:
Cash
23,000
Accounts receivable
27,600
Merchandise inventory
93,200
Unexpired insurance
4,140
Total Current Assets
147,940
Gross fixed assets
85,100
Accumulated depreciation
-29,440
Net Fixed assets
55,660
Total Assets
203,600
Current Liabilities
Accounts payable
27,664
Accrued wages and commissions payable
5,835
Loan
0
Total Current Liabilities
33,499
Owner’s equity
170,101
Total equity and liabilities
203,600
The projected sales in April and May are $110,000 and $184,000 respectively.
Alpha sales are 70% cash and 30% credit, collected in the following month. It has no currently overdue accounts and anticipates none in the future.
The company will purchase a second hand truck on 1 May 2008: $8,000
Miscellaneous cash expenses: 5% of the current sales
Rent: $4,600/month
Insurance expense: paid once a year (beginning of January 2008) = $5,520;
Depreciation expense: $1,150/month
Tax rate: 0%
Wages: $5650/month + 15% commission of sales/month
70% of the wages made in a specific month are paid in that month, the rests are paid in the following month)
The inventory policy of the company is to begin a month with a sufficient inventory to cover 80% of sales + $36,000 cushion
Cost of Goods Sold: 65% of sales
60% of the purchases made in a specific month are paid in that month, the rests are paid in the following month).
Alpha borrowed from one of its founder at 1.5% interest/month for the next 2 years. Alpha borrows from and repays the founder at the end of the month. The agreement with this founder stipulates a $30,000 minimum cash balance in the ventures checking account.
Construct Alphas cash budget, income statement, balance sheet and statement of cash flow for April 2008.