Assignment

Requirement #1

Given the following information for Jawa Corp. prepare a full cash budget for the months of April, May, and June.

All units are sold at a price of $24.75, with a per unit cost of $13.50. Sales are collected as follows: 60% month of sale, 30% month after sale and remainder 2nd month after sale. Purchases of materials, which account for 50% of the product cost (remainder of the product cost is Factory worker wages) are paid for 75% month of purchase and 25% month after purchase. Materials are purchased a month in advance.
In addition the following are paid monthly: Building Lease $21,750, Office salaries $10,500, Management Salaries $20,000, Trash removal $1,500, Utilities based on a rate of 20 cents per unit, Payroll taxes at the rate of 7.65% (paid on all wages), Equipment maintenance based on a rate of 35 cents per unit.

The company will also be making the following payments: May Insurance payment for the months of May-July $15,000, In April Income tax deposit of $30,000, the company will declare a quarterly dividend in May to be paid June 15th of $25,000, Employee first aid training at a cost of $2,500 is planned for July.

Depreciation is $21,265 per month based on straight line and Income taxes are based on an average effective tax rate of 11.50%.

At the start of April the company had a cash balance of $35,450.

Requirement #2

Based on the previous information prepare a traditional income statement (in proper format) for the month of June.

Requirement #3

The company likes to maintain a cash balance of $30,000 at all times. They are considering purchasing new machinery at the beginning of July at a cost of $175,000. Do they have a sufficient amount of cash on hand to make this purchase or would they need to make arrangements for any financing?

Requirement #4

Given that the company has the following dividend policy:

Dividends are paid quarterly based on the annual rate of $2.00 per share.

How many shares of stock are currently outstanding?