EXCEL PROJECT INSTRUCTIONS
Assume ABC Company has asked you to not only prepare their 2013 year-end Balance Sheet but to also provide pro-forma financial statements for 2014. In addition, they have asked you to evaluate their company based on the pro-forma statements with regard to ratios. They also want you to evaluate 3 projects they are considering. Their information is as follows:
End of the year information:
Accounts Receivable 126,000
Accumulated Depreciation 292,460
Accounts Payable 36,900
Short-term Notes Payable 18,300
Long-term Notes Payable 157,225
Common Stock 450,000
Retained Earnings Solve
• Sales for December total 12,000 units. Each month's sales are expected to exceed the prior month's results by 5%. The product's selling price is $15 per unit.
• Company policy calls for a given month's ending inventory to equal 80% of the next month's expected unit sales. The December 31 2012 inventory is 9,400 units, which complies with the policy. The purchase price is $8 per unit.
• Sales representatives' commissions are 10.0% of sales and are paid in the month of the sales. The sales manager's monthly salary will be $3,500 in January and $4,000 per month thereafter.
• Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable.
• The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of sale).
• All merchandise purchases are on credit, and no payables arise from any other transactions. One month's purchases are fully paid in the next month.
• The minimum ending cash balance for all months is $140,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.
• Dividends of $100,000 are to be declared and paid in February.
• No cash payments for income taxes are to be made during the first calendar quarter. Income taxes will be assessed at 35% in the quarter.
• Equipment purchases of $55,000 are scheduled for March.
• Prepare the year-end balance sheet for 2013. Be sure to use proper headings.
• Prepare budgets such that the pro-forma financial statements may be prepared.
• Sales budget, including budgeted sales for April.
• Purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the March 31 budgeted inventory.
• Selling expense budget.
• General and administrative expense budget.
• Expected cash receipts from customers and the expected March 31 balance of accounts receivable.
• Expected cash payments for purchases and the expected March 31 balance of accounts payable.
• Cash budget.
• Budgeted income statement.
• Budgeted statement of retained earnings.
• Budgeted balance sheet.
See attached excel spreadsheet for detailed responses. Click in cells to see computations. Each budget is on a separate tab.
Formatting does not work in this screen as you see (see look at excel):
Jan Feb Mar ...
See attached excel spreadsheet for detailed responses. Click in cells to see computations.