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Case 5

Progressive Chokers (Cebu), Inc. prepared cash budgets, income statements, statements of financial position, and cash flow statements for the three months ending March 31, 20XX. The cash budget projected cash receipts and payments, showing a need to borrow $20,000 in January and $220,000 in February to meet minimum cash balances. The income statement showed net profit of $90,000 for the period. The statement of financial position presented assets of $3,381,000 including $290,000 cash and liabilities of $1,752,000. The cash flow statement showed no cash flows from operations or investing, but $240,000 from financing through notes payable.

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481 views3 pages

Case 5

Progressive Chokers (Cebu), Inc. prepared cash budgets, income statements, statements of financial position, and cash flow statements for the three months ending March 31, 20XX. The cash budget projected cash receipts and payments, showing a need to borrow $20,000 in January and $220,000 in February to meet minimum cash balances. The income statement showed net profit of $90,000 for the period. The statement of financial position presented assets of $3,381,000 including $290,000 cash and liabilities of $1,752,000. The cash flow statement showed no cash flows from operations or investing, but $240,000 from financing through notes payable.

Uploaded by

Richie Donato
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Case 5.

Planning and Budgeting


Requirements:
Assumptions on the case:

a. No other costs are directly attributable to sales except for the purchases of raw materials.
Thus, Cost of Sales is based on the percentage of Purchases to Sales which is 60%.
b. Accrued Expenses and Notes Payable are paid by the end of the year.
c. No depreciation was recognized.

Progressive Chokers (Cebu), Inc.


Schedule of Cash Budget
For the Three Months Ending March 31, 20XX

January February March


Estimated Cash Receipts from:
Collections of Accounts Receivable 590,000.00 680,000.00 890,000.00
Total Cash Receipts 590,000.00 680,000.00 890,000.00
Estimated Cash Payment for:
Raw Materials 360,000.00 600,000.00 390,000.00
Labor Costs 150,000.00 200,000.00 160,000.00
Selling and Administrative Expenses 100,000.00 100,000.00 100,000.00
Total Cash Payments 610,000.00 900,000.00 650,000.00
Cash Increase (Decrease) (20,000.00) (220,000.00) 240,000.00
Cash Balance, beginning 50,000.00 50,000.00 50,000.00
Cash Balance, end 30,000.00 (170,000.00) 290,000.00
Borrowings to meet min. cash balance 20,000.00 220,000.00 -
Adjusted Cash Balance, End 50,000.00 50,000.00 290,000.00

Progressive Chokers (Cebu), Inc.


Income Statement
For the Three Months Ending March 31, 20XX

Sales 2,250,000.00
Less: Cost of Sales (see schedule below) 1,350,000.00
Gross Profit 900,000.00
Less: Selling and admin Expenses 300,000.00
Labor Costs 510,000.00
Net Profit 90,000.00

Cost of Sales

Beg. Inventory 545,000.00


Purchases (Jan-Mar) 1,440,000.00
Total 1,985,000.00
Ending Inventory (635,000.00)
Cost of Sales 1,350,000.00

Progressive Chokers (Cebu), Inc.


Statement of Financial Position
As of March 31, 20XX

Cash 290,000.00
Accounts Receivable 620,000.00
Inventories 635,000.00
Current Assets 1,545,000.00

Non-current Assets 1,836,000.00

Total Assets 3,381,000.00

Accounts Payable 450,000.00


Notes Payable 640,000.00
Accrued Expenses 212,000.00
Current Liabilities 1,302,000.00

Non-current Liabilities 450,000.00

Total Liabilities 1,752,000.00

Common Stock 100,000.00


Retained Earnings 1,529,000.00

Total Liabilities and Shareholder's Equity 3,381,000.00


Progressive Chokers (Cebu), Inc.
Cash Flow Statement
For the Three Months Ending March 31, 20XX

Cash Balance, Beginning 50,000.00

Cash Flow from Operations


Net Income 90,000.00
Less: Increase in Accounts Receivable 90,000.00
Add: Increase in Accounts Payable 90,000.00
Less: Increase in Inventories 90,000.00
Net Cash Flows from Operations -

Cash Flow from Investing -


Net Cash Flows from Investing -

Cash Flow from Financing


Notes Payable 240,000.00
Net Cash Flows from Financing 240,000.00

Cash balance, Ending 290,000.00

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