INFORMATION AND DATA BASES FOR PROJECTIONS AND WITH BUDGET ORATION
SOTOMENOR COMPANIES then relates historical financial data, basis for the required budget projections and predictions.
SALES FOR MONTHS DURING THE PAST YEAR 20X1
JANUARY $550,000 FEBRUARY $825,000 MARCH $575,000
APRIL$870,000MAYO $1, 080,000 JUNE $1, 065,000
JULY$1, 070,000AUGUST $1, 060,000 SEPTEMBER $1, 180,000
OCTOBER$1, 140,000NOVEMBER $1, 290,000 DECEMBER $1, 460,000
Sales Projection: 20X2
Having consulted on the Company's Managers' Committee, it is agreedor that the business plans and strategies, it was estimated appropriate, 35% increase in sales reported during the months of last year 20x1. All sales are estimated on credit.
Predisecting collections based on the monthly sales projection:
- 70% of projected sales for each month (January, February, March, etc.) plan to charge during the same month (January, February, March, etc.) .
- Due to a new collection policy a two (2) % discount will be offered, if customers pay within ten days from the invoice date. It is projected that 3/4 parts of the customers will be eligible for this payment term.
- 15% of each month's sales are projected to collect the month following the month of the sale. For example: January sales charged in February and so on.
- 10% of sales each month are projected to charge two months after the month of the sale. For example: January sales charged in March.
- 5% of sales each month are projected to charge three months after the month of the sale.
- Due to the economic indicators and financial forecasts of the experts, it is advisable to consider that of this projected collection product, 2.75% isuncollectible. For example: January sales charged in April.
Emergency Situations Policy.
- For considerations and apprenticeships of the hurricane phenomenon of Maria, the company's officials have recommended that after determining and calculating the collection projections for each month, appropriate (separate) 10%, from the projected collections, as a fund to alleviate and attend to such emergencies. This policy implies that such funds are not to cover disbursements of the costs and expenses that are projected for the budget year.
Sales, collections and emergency projections are key to the formulation, structuring and calculations of the Sales and Sales Collections Budget projections.
Merchandise Purchase Projection, necessary to meet projected sales. 20X2
- Sales projections affect purchases equally. These account for 55% of projected monthly sales. They are purchased during the month of the sale and are planned to pay within the same month with a two% cash discount.
Procurement projections are for the formulation, structuring and calculations of the Procurement Budget projections
Projection of monthly disbursements for operating expenses and the principal of debts with their corresponding interest. 20X2
Gastos: all are paid from projected sales and in the month that are incurred. These are:
- Swings: 27.50% of projected monthly sales
- Comissions 2% of monthly projected sales, plus 3.5% of what was charged monthly.
- Nomines: 10.9% of what is paid in salaries and commissions.
- Utiities: $4,000per month
- Insurance:$12,000 per month
- Mortgage: 6.5% simple interest, from the balance of the principal to be divided monthly payable monthly.
- Interest Other debts: 12% simple interest on the principal's balance sheet to be divided monthly to apply to the others.
Amortization of principal of debts:
HIPOTECAS$950,000 of total principal to January. Payments at the end of the month to main of $30,000. HINT: Simple interest calculation. The main one decreases monthly and the time in the formula, will increase monthly one month at a time.
OTHER DENS$750,000 Dand total main. Monthlyterms of $25,000 principal,at the end of themonth. The main one decreases monthly and the time in the formula anger increasing monthly one month at a time.
The information presented in this section is for the formulation, structuring and calculationofof the Expenditure and Debt Budget projections
Projection of cash flow to shape and structure the Cash Budget. 20X2
The basis for making this budget are the results calculated in terms of collections and disbursements for purchases, expenses and debts from previous budgets; plus the information provided below.
- Initial cash balance - Cash is $50,000
- Minimum monthly cash balance in the budget period is $100,000.
- Shareholders are requiring dividends of $150,000 in the months of March, June, September and December.
- Such dividends will be awarded as long as the company does not have to borrow or finance them with debts. There has to be cash to grant it. There are no payments less than $150,000.
- Operational andmaximum cashbalancegaps, in the planned months, may be financed by short-term debts.
REQUIRED: PREPARE THE FOLLOWING BUDGETS FOR THE 20X2:
- Sales and Collections Budget. Section I. (Remember that the business existed last year 20X1. Therefore, sales in the last months of20X1 are planned to be collected in the period 20X2. Do not include such collections, significantly affect all calculations in 20X2 budgets).
- PResore of Purchases and Purchase Payments – Section II.
- Presoposing payments for expenses and debt repayment. Section III.
- CASH BUDGET Section IV, with effect from the above.
NOTE: MAKE SURE THE PRESENTATION IS IN ELECTRONIC SHEET FORMAT. Or HAND. Remember the Evaluation Rubric.