Accounting Assignment . Check figures are provided

Accounting Assignment .

Check figures are provided

Attachment 1

Attachment 2

ATTACHMENT PREVIEW

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Master Budget

Total cash collections, November = $13,000

Total cash disbursements, December = $11,400
Cash Budget

Ending cash balance, November = $4,220

ATTACHMENT PREVIEW

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Sales
:
Coffee Company sells its coffee beans in 5-pound packages in one primary
store location in the area surrounding Pace University for $25 each.
Sales of coffee
bean packages are as f
ollows:
Cash Receipt policy
: Sales of coffee bean bags to the coffee shop are collected from
customers using the following policy: 40% in the month of sale and 60% in the following
month.
Assume that bad debts are negligible due to the thorough vetting of the
creditworthiness of their customers.
Inventory
: Coffee Company has two normal seasonal buildups in inventory: (1) before
the fall quarter begins in September, (2) prior to the December break.
Ending inventory
purchases should equal 80% of the following month’s sales in units.
Coffee beans are
purchased in 25-pound coffee bean sacs from growers in Dominica for $100 each.
Cash Payment policy
:
Purchases of coffee bean sacs from Dominica are paid using the
following policy: 50% paid in the month of purchase and the remaining 50% in the
following month.
Cash borrowing
: Coffee Company requires a minimum cash balance of $4,000 at the
end of each month to ensure that they are able to pay any unforeseen bills.
In order to
maintain this minimum cash balance, they have an agreement with Bank of America to
borrow money in denominations of $1,000 as needed.
Any borrowed funds are subject to a 1% simple monthly interest rate, paid in cash
monthly, for each full month that money is borrowed (assume that any borrowing occurs
on the last day of a month).
For example, if the minimum amount of $1,000 is borrowed
in October from the bank, 1% interest (or $10) is paid to the bank in November,
even if
the $1,000 is repaid in November
.
Operating Expenses
:
All operating expenses are paid during the month in cash except
for depreciation expense and prepaid insurance.

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Prepaid insurance was purchased on January 1, 2013 and runs through
December 31, 2013.

A new piece coffee packaging equipment was purchased for cash on October 1
st
for $12,000 in anticipation of the December busy period.
Depreciation on the
new piece of equipment is incurred over 24 months.

Monthly depreciation expense for the company’s building is $2,000 and the old
piece of equipment is $500.

Wages/salaries total $2,000 per month and utilities total $300 per month.

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