Financial Planning and Budget Analysis

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Financial Planning and Budget AnalysisChapter 6 and 7 ProblemsPlease complete the following 8 exercises below in either Excel or a word document (but must be singledocument). You must show your work where appropriate (leaving the calculations within Excel cells isacceptable). Save the document, and submit it in the appropriate week using the Assignment Submissionbutton.Chapter 6 Exercise 22. Schedule of cash collectionsSugarland Company sells a single product and anticipates opening a new facility in Charlotte on May 1of the current year. Expected sales during the first three months of activity are: May, $60,000; June,$80,000; and July, $85,000. Thirty percent of all sales are for cash; the remaining 70% are on account.Credit sales have the following collection pattern: Collected in the month of sale 60%Collected in the month following sale 35 Uncollectible 5SUGARLAND COMPANYSCHEDULE OF CASH COLLECTIONSFOR THE THREE MONTHS ENDED JULY 31, 20XXMayJuneJulyTotalMay salesCash$18,000$ 18,000CreditJune salesCash25,200$14,70024,00039,90024,000CreditJuly salesCash33,600$19,60025,50053,20025,500Credit35,70035,700Totalbudgetedcashcollections$43,200$72,300$80,800$196,300

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Computations May sales:$60,000 X 30% = $18,000; ($60,000 X 70%) X 60% = $25,200; ($60,000 X 70%) X 35% =$14,700June sales:$80,000 X 30% = $24,000; ($80,000 X 70%) X 60% = $33,600; ($80,000 X 70%) X 35% =$19,600July sales:$85,000 X 30% = $25,500; ($85,000 X 70%) X 60% = $35,700b.The remaining collectible accounts receivable are $20,825 (($85,000 X 70%) X 35%).Chapter 6 Exercise 44. Production and cash-outlay computationsRPR, Inc., anticipates that 120,000 units of product K will be sold during May. Each unit of product K requiresfour units of raw material A. Actual inventories as of May 1 and budgeted inventories as of May 31 follow.1-May31-MayProduct K (Units)55,00060,000Rate Materials A (Units)40,00037,000Each unit of raw material A costs $8; RPR pays for all purchases in the month of acquisition. Invoices thataccount for 80% of the cost of materials acquired will be paid within 10 days of receipt, entitling the company toa 2% cash discount.a.Determine the number of units of product K to be manufactured in May.Number of units of Product K to be manufactured = 120000 + 60000–55000 =125,000b.Compute the May cash outlay for purchases of raw material A.Cash outlay for purchases of raw material A := (125000 x 4) + 37000–40000= 500000 + 37000–40000 = 497,000= (497000 x $8 x .80 x .98) + (497000 x $8 x .20)=3,117,184 + 795,200Total cash outlay for purchases=$ 3,912,384

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Chapter 6 Exercise 55. Abbreviated cash budget; financing emphasisAn abbreviated cash budget for Big Chuck Enterprises follows.Big Chuck wishes to maintain a $10,000 minimum cash balance at all times. Additional financing is available(and retired) in $1,000 multiples at a 12% interest rate. Assume that borrowings take place at the beginning of themonth; retirements, in contrast, occur at the end of the month. Interest is paid at the time of repaying principal andcomputed on the portion of principal repaid.A.Find the unknowns in Big Chuck's abbreviated cash budget.July ending cash balance =-4000 + 14000 = 10000August interest payment = 4000 x .12 x 1/12= 40August ending cash balance = 15000–4000–40 = 10960September interest payment = 7000 x .12 =720September ending cash balance = 17960-7000–70 = 10890B.Determine the outstanding loan balance as of September 30, after any repayments have been made.Outstanding loan balance, September 30 = 14000–4000–7000 =$ 3,000JulyAugustSeptemberBeginning cash balance$10,000$ ?$ ?Add: Cash receipts50,00063,00071,000Deduct: Cash payments-64,000-58,000-64,000Cash excess (deficiency) before financing($4,000)$15,000$17,960FinancingBorrowing to maintain minimum balance14,0000-0Principal repayment0-4,000-7,000Interest payment0-40-70Ending cash balance$10,000$10,960$10,890

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