2024 – Wine Depot Cash Budget2010201120122013 Operating activities Operating cash receipts Product sales revenue Collections in the year of sale

Wine Depot

Cash Budget2010201120122013

 

Operating activities

Operating cash receipts

Product sales revenue

Collections in the year of sale

Collections in the year following sale

Operating cash receipts

Operating cash payments

Purchases

Cost of expected sales

Required ending inventory

Beginning inventory

Purchases

Payments in the year of purchase

Payments in the year following purchase

Cash payments for purchases

Expenses

Advertising expense

Marketing expense

Interest expense

Salaries expense

Wages expense

Supplies expense

Utilities expense

Expenses

Operating cash payments

Cash from (to) operating activities

Investing activities

Facility purchases

Equipment sales

Cash from (to) investing activities

Financing activities

Loan proceeds

Loan payments

Cash from (to) financing activities

Change in cash

Beginning cash

Ending cash

 

Assumptions

 

The Wine Depot is contemplating several alternative means of financing their annual acquisition of $75,000 in wine storage facilities. One option is to borrow $300,000 from a local bank for 5 years at 11 percent per annum. The bank has asked them to produce a 4-year cash budget broken down by year (2010 155156through 2013). Sales of $500,000 are expected in the first year, with sales increasing each year thereafter by 22 percent. Sales in 2009 were $450,000. Purchases are based on an expected cost of sales of 45 percent and a required ending inventory of 10 percent of next year’s sales. Purchases in 2009 were $200,000, and beginning inventory was $32,000. Annual expenses include advertising expense of $10,000, marketing expense of $6,000, depreciation expense of $8,000, interest expense of $35,000, salaries expense of $150,000, wages expense of $65,000, supplies expense of $7,500, and utilities expense of $10,000. All expenses except depreciation are paid in the year in which they are incurred and are expected to increase 5 percent each year. Collections in the year of sale are expected to be 94 percent, with the remaining 6 percent collected in the next year. Payments in the year of purchase are expected to be 93 percent, with the remaining 7 percent paid in the next year. Proceeds from the $300,000 loan are expected in 2010, and $75,000 of facilities will be purchased each year. Proceeds from expected equipment sales each year are expected to amount to $10,000. Annual payments of $81,171 on the loan also begin in 2010. The beginning cash balance in 2010 was $20,000.

   Using the ch6-05 file to start your work, create a cash budget (as you did in the chapter) based on the assumptions just provided. Use Excel’s grouping feature to group operating cash receipts, operating cash payment, cash from (to) operating activities, cash from (to) investing activities, and cash from (to) financing activities. Save your file as ch6-05_student_name (replacing student_name with your name).

·         a. Print the newly completed worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer.

·         b. Print the worksheet from part a, above, in Formula view, with your name and date printed in the lower left footer and the file name in the lower right footer. Print only columns A, B, and C of the cash budget, no assumptions.

·         c. Collapse rows to level 2; then print the worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. Print cash budget only, no assumptions.

·         d. Collapse rows to level 2, and then use what-if analysis to calculate end-of-year cash if the sales growth each year were 10 percent. Print the resulting worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. Print cash budget only, no assumptions.

 

·         e. Undo the what-if analysis performed in part d. Collapse rows to level 2, and then use goal seek to determine what annual sales growth would be needed to produce an ending cash balance of $50,000 in 2013. Print the resulting worksheet in Value view, with your name and date printed in the lower left footer and the file name in the lower right footer. Print cash budget only, no assumptions.