HASF and company is a retails hardware store information about the store operations follows
November 2017 sales 400,000
Sales are budgeted 440,000 for December and 4 00,000 for January 2018
Credit sales typically are 80% of total sales Collection are expected to 55% in the month of sales and 45% in the month following sales
Gross profit margin 25%
A total of 80% of the merchandise for resale its purchase in the month prior to the month of sales and 20% is purchase in the month of sales payment for merchandise is made in the month following the purchase
Other month expenses paid in cash amount 45,200
Annual depreciation is 432,000
The company balance sheet as of November 30 2017 is as follow
HASF Hardware inc
Balance sheet
As on November 30 2018
Cash 44,000
A/c receivable 152,000
Inventory 280,000
Property plant and equipment 1,724,000
Total assets 2,200,000
a/c payable 324,000
common stock 1,590,000
Retained earning 286,000
Total liabilities and owner equity 2,200,000
Required
• Schedule of expected cash collection in \Dec 2017• Schedule of expected cash disbursement in Dec 2017• Cash budget in Dec 2017• Budgeted income statement in Dec 2017• Budgeted balance sheet as on Dec 2017
HASF and Company is a prominent retail hardware store, catering to the needs of its customers with a wide range of products. This essay provides an in-depth analysis of the store’s operations for December 2017, including cash collection, disbursement, cash budget, budgeted income statement, and budgeted balance sheet.
To determine the expected cash collection for December 2017, we need to consider credit sales, collections, and timing. According to the provided information, credit sales are typically 80% of total sales. Collections are anticipated to be 55% in the month of sales (November) and 45% in the following month (December). Based on these figures, we can calculate the projected cash collection for December:
Projected Cash Collection = (Credit Sales in November * Collection Percentage in November) + (Credit Sales in December * Collection Percentage in December) = ($400,000 * 0.55) + ($440,000 * 0.45) = $220,000 + $198,000 = $418,000
Cash disbursements include payments for merchandise, other monthly expenses paid in cash, and annual depreciation. According to the information given, 80% of merchandise is purchased in the month prior to the month of sales, and 20% is purchased in the same month as sales. Payments for merchandise are made in the month following the purchase. Other monthly expenses paid in cash are $45,200, and the annual depreciation is $432,000. The cash disbursement for merchandise is calculated as follows:
Cash Disbursement for Merchandise = (Merchandise Purchased in November * 80%) + (Merchandise Purchased in December * 20%) = ($400,000 * 0.80) + ($440,000 * 0.20) = $320,000 + $88,000 = $408,000
Cash Disbursement = Cash Disbursement for Merchandise + Other Monthly Expenses + Annual Depreciation = $408,000 + $45,200 + $432,000 = $885,200
Cash Budget in December 2017: The cash budget can be calculated by combining the projected cash collection and subtracting the projected cash disbursement from the beginning cash balance (as of November 30, 2017).
Cash Budget = Beginning Cash Balance + Projected Cash Collection – Projected Cash Disbursement = $44,000 + $418,000 – $885,200 = -$423,200 (Negative balance indicates a cash deficit)
Budgeted Income Statement in December 2017: The budgeted income statement can be constructed using the given information and calculations:
Total Sales = Credit Sales + Cash Sales = $400,000 + ($440,000 – $408,000) (Cash sales are total sales minus merchandise purchased in the same month) = $432,000
Cost of Goods Sold = Total Sales * (1 – Gross Profit Margin) = $432,000 * (1 – 0.25) = $324,000
Gross Profit = Total Sales – Cost of Goods Sold = $432,000 – $324,000 = $108,000
Net Income = Gross Profit – Other Monthly Expenses – Annual Depreciation = $108,000 – $45,200 – $432,000 = -$369,200 (Negative net income indicates a loss)
The budgeted balance sheet can be prepared by adjusting the November 30, 2017 balance sheet with the calculated cash deficit, net income, and other changes. Given the significant changes in cash, it is advisable to consult financial experts for accurate reporting.
The analysis and projections for HASF and Company’s retail hardware store operations in December 2017 provide valuable insights into the store’s financial health and potential challenges. These projections aid in decision-making, resource allocation, and financial planning, enabling the company to navigate its operations effectively and achieve its business objectives. However, it’s essential to consult financial experts to ensure accurate and precise reporting for regulatory compliance and strategic decision-making.
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