Required:
Prepare the following budgets for a merchandising company. Decide on a name for this company. Follow
the format of the budgets shown in chapter 8 of your textbook. The budgets should be in proper format.
That is, each budget should be properly labeled and should start and end on one page without having page
breaks in the middle. There can be more than one budget or a budget schedule on the same page (For
example, the Sales Budget and the Schedule of Cash Collections can be on the same page) so long as
they completely fit on that page. You need to put your name and your ID # on every page of the
assignment.
My Student ID:01806204 that I have to use in the project :
1. Prepare a sales budget for January through March and for the Quarter in total. The selling
price per unit is $45.00. Use the last five digits in your ID number as basis for the data for
budgeted sales in units. Budgeted sales are obtained by multiplying each number in the ID
by 10,000. However, note that if your ID# contains the number 0 use 10 instead (i.e a 0 is
equal to 100,000.)
For example, if the last five digit in your student ID are 14607, the budgeted sales in units would be:
December of the previous year 10,000
January
40,000
February
60,000
March
100,000
April
70,000
2. Prepare a purchases budget and the schedule for Disbursements for Purchases for January through
March and for the first quarter in total. Assume that the company only sells one product that can be
purchased at $35.00 per unit. The market for this product is very competitive and customers highly value
quality and on time delivery of the product. Also assume that currently the company has an inventory policy
that ending inventory should equal 50% of the next monthàbudgeted sales.
3. Prepare a cash budget for January through March and for the first quarter in total. The
company maintains a minimum cash balance of $100,000.00, and this was the ending cash balance
in the cash account on December 31.
Additional Data:
ast experience shows that 40% of sales are collected in the month of the sale, and 60%
in the month following the sale.
ther expenses include $35,000 per month for rent, $104,000 per month for advertising,
and $76,000 per month for depreciation.
ll costs are paid in the current month except inventory purchases, which are paid in the
month following the purchase (i.e. January purchases of inventory are paid in February).
”he company has an open line of credit with a bank and can borrow at an annual rate of
12%. For simplification assume that all loans are made at the beginning of the month
when a borrowing need is identified, and repayments are made at the end of a month
when the company has excess cash (i.e. the company does not take out addition loans to
pay current loans.)
lso, interest associated with a loan is only paid at the time when that loan is paid (i.e. a
loan is only paid if there is enough cash to pay off the whole loan, any interest associated
with it, and the company still has enough cash left over to meet the requirement for the
minimum cash balance.)
4. Prepare the Budgeted Income Statement based on all of the information given above.
Label the budgets prepared in Steps 1-4 as budget scenario A.
5. Repeat steps 2-4 for budget scenarios B and C using the following Desired Ending Inventory
assumptions:
B.
C.
Ending Inventory
90%
10%
6. Write a brief analysis of the three inventory policies depicted in the budget scenarios A, B and C and
recommend a policy that the company should implement. Give reasons for your recommendation. Your
write-up should be based on the results you obtained from the analyses in steps 1-5 above for each of the
scenarios A, B, and C. Assume that you are writing on behalf of a professional consultant advising the
President of the company about the companyàinventory policies. Your write-up should be in the form of
a one-page Memo to the President of the company. Organization, grammar, and spelling are
important.
Note: Please upload your analysis as a spreadsheet and your memo as a word document in two
separate files. If you decide not to use a different spreadsheet program than Excel to do your
analysis, either try to convert your spreadsheet file to the Excel format by saving it as an Excel
file. You can use either a MSWord or pdf format for the memo.

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