BUSN 5200

Assignment for Week 5:

For Week 5, please turn in the answers to
the following questions:

Question 1.
Prepare a budget for this year for the Administrative Department at Tom’s
Toyota Company based on the following information:

Year Forecasting Assumption Budget for this Year



2% increase




1% decrease




3% increase




2.5% increase


Office Rent


2% increase




no change


Total: $78,600


Question 7.
Big Bob’s Discount Appliances expects sales of $5,000, $5,000, and
$10,000 during April, May, and June (big sale in June). To build business, Big Bob lets all customers
buy on credit, and all do so. In the
past, 50% of Big Bob’s sales have been collected during the month of sale, 40%
are collected the following month, and 10% the month after that. If this trend continues, what will be Big
Bob’s total cash collections in the month of June?

Question 8.
Little Louie’s expects to have $100 in cash on hand at the beginning of
June, and the company’s target cash balance is $100. Net cash flow for June is minus $300. Assuming that Little Louie’s borrows to meet
short?term cash needs and pays back as soon as surplus cash is available, what
will be the company’s ending cash balance after financing at the end of June?

Question 9.
Ma & Pa Kettle’s Chili Company has begun selling a new chili recipe
and they want you to help them with next year’s budgeted financial
statements. Using the worksheet below,
complete Ma & Pa’s forecast and answer the questions which follow.


To begin with, Ma & Pa are sure sales
will grow 50% next year. Assume that is
true. Then assume that COGS, Current
Assets, and Current Liabilities all vary directly with Sales (that means if
sales grows a certain percentage, then the account in question will grow by
that same percentage). Assume that fixed
expenses will remain unchanged and that $1,000 worth of new Fixed Assets will
be obtained next year. Lastly, the
current dividend policy will be continued next year.

& Pa Kettle Chili Company, Inc.



This year for next year

$10,000 ________

COGS 4,000 ________

Gross Profit 6,000 ________

Fixed Expenses 3,000 ________

Before?Tax Profit 3,000 ________

Tax @ 33.3333% 1,000 ________

Net Profit $2,000 ________

Dividends $0 ________

Current Assets $25,000 ________

Net Fixed Assets 15,000 ________

Total Assets $40,000 ________

Current Liabilities $17,000 ________

Long?term debt 3,000 ________

Common Stock
7,000 ________

Retained Earnings 13,000 ________

Total Liabs & Eq $40,000

Amount need to
balance the balance sheet ________

total assets minus projected

total liabilities & equity *)

* If this number is positive it means Ma & Pa need additional
external funding to finance their projected asset growth. If this number is negative it means Ma &
Pa have programmed too much financing for the amount of assets they project.