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[answered] Miken Company: The following data relate to the operations
Miken Company:
The following data relate to the operations of Miken Comapny, a distributor of consumer goods.
Accounts as of March 31:
???????? Cash??????????????????????????? ??? $8,000
???????? A/R????????????????????????????????? $20,000
???????? Inventory???????????????????????? $36,000
???????? Building & Equip (net)??????? $120,000
???????? A/P????????????????????????????????? $21,750
???????? Capital stock????????????????????$150,000
???????? Retained Earnings???????????? $12,250
A. The gross margin is 25% of sales
B. Actual and budgeted sales data:
??????????? March (actual)???????? $50,000
??????????? April?????????????????????? $60,000
??????????? May??????????????????????? $72,000
????????????June?????????????????????? $90,000
????????????July??????????????????????? $48,000
C. Sales are 60% cash and 40% credit. Credit sales are collected in the month following sale. The A/R at March 31 are a result of March credit sales.
D. Each month's ending inventory should equal 80% of the following month's budgeted COGS
E. One-half of a month's inventory purchases is paid for in the month of purchase; the other half is paid for in the following month. The A/P at March 31 are the result of March purchases of inventory
F. Monthly expenses are as follows: commissions, 12% of sales; rent, $2,500 per month; other expenses (excluding depreciation), 6% of sales. Assume that these expenses are paid monthly. Depreciation is $900 per month.
G. Equipment costing $1,500 will be purchased for cash in April
H. The company must maintain a minimum cash balance of $4,000. An open line of credit is available at a local bank. All borrowing is done at the beginning of a month, and all repayments are made at the end of the month; borrowing must be in multiples of $1,000. The annual interest rate is 12%. Interst is paid only at the time of repayment of principal. (figure interest in whole months 1/12, 3/12, etc.)
Using this information complete the following schedules:
1. Schedules of expected cash collections
2. Merchandise purchase budget
3. Schedule of cash disbursments (merchandise)
4. Schedule of cash disbursments (operating expenses)
5. Cash budget
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This question was answered on: Sep 18, 2020
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