Case Study: Bill's Custom Planters

Required:

1. Prepare a schedule that shows the beginning inventory, required production, expected sales, and ending inventory for each month, January through March 2003. Also show the quarterly totals.

2. Prepare a schedule that indicates the order dates for hardware, the expected arrival dates, the payment dates, the expected inventory prior to arrival, the order quantity.

3. Prepare a cash budget with columns for each month, January through March 2003, and a fourth column for the quarterly totals. Include separate lines for: expected cash collections from retail sales, expected cash collections during the discount period, expected cash collections during the net 30 period, and expected cash collections during each of the two late periods. Include separate lines for each type of cash payment, e.g., wood, hardware, rent, interest, etc. Include separate lines for the beginning cash balance, the ending cash balance, and the ending credit-line balance.

4. Prepare a pro forma schedule of the cost of goods manufactured, pro forma income statement and pro forma balance sheet for the quarter ending March 31, 2003. Assume that between January 1 and March 31, 2003, two wholesale accounts with combined balances of $1,450 are identified as uncollectable. BCP capitalizes finished goods inventory at the actual cost of production and uses the FIFO cost flow assumption.

5. Prepare a schedule or pro forma income statement that estimates the differences in expected profit between the current wholesale discount and the proposed wholesale discount.