Financial & Managerial Accting MBA-5601.McCarty Pointers
Corporation expects to begin operations on January 1, 2012; it will
operate as a specialty sales company that sells laser pointers over the
Internet. McCarty expects sales in January 2012 to total $200,000 and to
increase 10 percent per month in February and March. All sales are on
account. McCarty expects to collect 70 percent of accounts receivable in
the month of sale, 20 percent in the month following the sale, and 10
percent in the second month following the sale.Required:a. Prepare a sales budget for the first quarter of 2012.b. Determine the amount of sales revenue McCarty will report on the first 2012 quarterly pro forma income statement.c. Prepare a cash receipts schedule for the first quarter of 2012.d. Determine the amount of accounts receivable as of March 31, 2012.2.
Preparing pro form income statements with different assumptions. Top
executive officers of Zottoli Company, a merchandising firm, are
preparing the next yearâs budget. The controller has provided everyone
with the current yearâs projected income statement. Sales revenue
$2,000.000 Cost of goods sold 1,400,000 Gross profit 600,000 Net income
340,000 Cost of goods sold is usually 70 percent of sales revenue, and
selling and administrative expenses are usually 10 percent of sales plus
a fixed cost of $60,000. The president has announced that the companyâs
goal is to increase net income by 15 percent. Required a. What
percentage increase in sales would enable the company to reach its goal?
Support your answer with a pro forma income statement. b. The market
may become stagnant next year, and the company does not expect an
increase in sales revenue. The production manager believes that an
improved production procedure can cut cost of goods sold by 2 percent.
What else can the company do to reach its goal? Prepare a pro forma
income statement illustrating your proposal. c. The company decides to
escalate its advertising campaign to boost consumer recognition, which
will increase selling and administrative expenses to $340,000. With the
increased advertising, the company expects sales revenue to increase by
15 percent. Assume that cost of goods sold remains a constant proportion
of sales. Can the company reach its goal?3. P14-20 Kinnion Medical
Clinic has budgeted the following cash flows. January February March
Cash receipts$ 100,000 $106,000 $126,000 Cash payments For inventory
purchases 90,000 72,000 85,000 For S&A expenses 31,000 32,000 27,000
Kinnion Medical had a cash balance of $8,000 on January 1. The company
desires to maintain a cash cushion of $5,000. Funds are assumed to be
borrowed, in increments of $1,000, and repaid on the last day of each
month; the interest rate is 1 percent per month. Kinnion pays its vendor
on the last day of the month also. The company had a monthly $40,000
beginning balance in its line of credit liability account from this
yearâs quarterly results. Required Prepare a cash budget. (Round all
computations to the nearest whole dollar.)