Hh2.Account Bobcat Printing makes custom t---shirts and other promotional products for studentorganizations and businesses. It is beginning its first year of operations and needs toplan for its first quarter of operations. They would like to maximize their profits, andunderstand that accurate budgeting can help achieve that goal. The budgets will beprepared based on the following information:a. Sales on account are budgeted at $15,000 for Month 1, $23,000 for Month 2, and$30,000 for Month 3. Cash sales are 2,000 in Month 1. Company does not expect tohave any cash sales in Month 2 and Month 3.b. Sales are collected 70% in the month of the sale, and 30% in the month followingthe sale.c. Cost of Goods Sold is budgeted at 40% of Sales.d. Monthly selling, general, and administrative expenses are as follows: donations are 10%of sales; advertising is 8% of sales; miscellaneous is 5% of sales; and rent is$4,500 per month. All SG&A expenses are paid in the month they are incurred.e. Since all of the orders are custom made, no inventory is kept on hand at the endof the month.f. Inventory purchases are paid in full in the month following the purchase.g. Bobcat Printing is planning to purchase an equipment in Month 3 for $5,000 in cash.h. They would like to maintain a minimum cash balance of $2,000 at the end of eachmonth. The company has a line of credit agreement with a local bank to borrow up to$20,000. The interest rate on these loans is 1% per month ( 12% annual). Bobcat willrepay on the last day if has enough cash to pay the full balance and maintain an adequateending cash balance.i. The owner makes a draw of $3,000 every month. (Note: sole proprietors andpartnerships take owner's draws, while stockholders receive dividends). Based upon theinformation provided, complete the operating budgets provided in the excel template, andanswer the questions in Canvas. When making calculations always round up (forexample: 33 x 7% = 2.31, round up to 3.00).Check Figures:Gross MarginTotal assetsEnding Retained Earnings$42,000$16,000$3,391 DQuestion 11What is the projected beginning cash balance for Month 1?O $0300O $2,000O $2,500Question 12What is the projected ending cash balance for Month 1?$2,500O $2,000O $0O None of the above.

Budgets are the estimates or forecasts made for future period. This is quantitative form of action…

> O Question 11 What is the projected beginning cash balance for Month 1? O $0 O 300 $2,000 O $2,500 Question 12 What is the projected ending cash balance for Month 1? O $2,500 O $2,000 O $0 None of the above.

> O Question 11 What is the projected beginning cash balance for Month 1? O $0 O 300 $2,000 O $2,500 Question 12 What is the projected ending cash balance for Month 1? O $2,500 O $2,000 O $0 None of the above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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