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A cash-flow budget uses the same format as a cash-flowstatement. It is prepared on a monthly basis and it reflectsbudgeted income and expenses.

In addition to the cash-flow statement, Deon and May made a listof budget assumptions, listed for you here:

• Deon’s income will increase by 5%, effective January 1. Hisbonus is generally 10% of his income in the previous year, and hereceives it in January.
• May’s raise will be 3%, effective January 1.
• Interest and dividend income will conservatively be the same in2017 as it was in 2016 and will be received on a monthlybasis.
• Mortgage payments will be the same in 2017 as they were in2016.
• Federal income taxes are estimated at 20%, state income taxesat 6%, and social security taxes at 7.65% of wages, includingDeon’s bonus.
• Property insurance and property taxes are paid every sixmonths, in June and December. The amount is expected to be the samein 2017 as it was in 2016.
• May will contribute $60 per week for the employee portion oftheir medical insurance. According to her pay schedule, April andJune are five-week months.
• Auto insurance is paid at the end of each calendar quarter andshould not be more than it was in 2016.
• Deon and May would like to purchase a new car in the next fewyears and will put $500 a month away specifically for thatpurpose.
• Deon and May don’t expect the amount of variable expenses tochange in 2017 except that they would like to double theircharitable contributions and go on a vacation to Ireland in June.The vacation will cost $6,000.
• Gift purchases are made mostly around the holidays, so Deon andMay are planning to pay half of the gift expense in December andhalf in January when the credit card bill comes in.
• Water and sewer is billed quarterly, in January, April, July,and October. The cost of heat should be spread over six months fromNovember to April.
• All other variable expenses can be spread evenly every month at2016 amounts.

Use the information from their cash-flow statement (listed inthe first column of the following annual budget) and their budgetassumptions to fill in the missing amounts for the first six monthsof Deon and May’s monthly budget for 2017. Note: Be sure to fill inevery blank space with a value.

Annual Budget

Cash-Flow Statement

2017

Name: Deon and May Daley
2016 Jan. Feb. Mar. Apr. May Jun.
INCOME
Deon’s salary 59,000
May’s salary 53,100
Deon’s Bonus 5,000
Interest and dividends 150
Total Income $117,250
EXPENDITURES
Fixed Expenses
Mortgage 14,976
Deon’s federal income taxes 12,800
Deon’s state income taxes 3,840
Deon’s social security taxes 4,896
May’s federal income taxes 10,620
May’s state income taxes 3,186
May’s social security taxes 4,062
Property taxes 4,100
Property insurance 1,200
Medical insurance 2,400
Automobile insurance and registration 700
Savings for auto purchase
Total Fixed Expenses $62,780
Variable Expenses
Food 1,620
Entertainment 3,000
Dining out 4,700
Electric 350
Water and sewer 800
Heat 1,250
Cable TV 3,000
Telephone 600
Cell phone 900
Gifts 2,000
Personal care 600
Medical expenses 3,700
Vehicle gas and maintenance 2,530
Charitable contributions 1,500
Vacation
Total Variable Expenses $26,550
Total Expenses $89,330
SURPLUS (DEFICIT) $27,920

Deon and May have an emergency fund of $40,000. They would liketo start saving for retirement, but they have not signed up fortheir companies’ 401(k) plans. Neither company matches 401(k)contributions.

What do you suggest for Deon and May based on their goals andthe budget that they have put together?

The $40,000 that the Daleys have saved for an emergency is___three months of expenses. They have not, however, takenadvantage of the employer 401(k) plans that are available to them.If an employer does not match contributions, it is ____advantageousto contribute to a company-sponsored retirement savings planbecause the contributions to the plan are invested with___earnings. If the Daleys invest part of their surplus in their401(k) plans, they will save the designated amount plus another___of that amount because of the tax savings.

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Elin Hessel
Elin HesselLv2
28 Sep 2019

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need some help filling out my balance and income statement using the following information given.

Using a Percentage of Sales method from 2017 results and the Given Information below, derive the 2018 Pro Forma (forecast) Income Statement and Balance Sheet (i.e. fill in the 2018 cells with the appropriate amounts).

Is there a “plug” needed? If so, how much is it? What does it tell you about Scarlet’s forecasted 2018 financial projections and what could Scarlet do to remedy the situation?

Based on Scarlet’s 2017 & 2016 financials, what is her business’s Sustainable Growth Rate (SGR)?

Given Information:

Scarlet believes that her 2018 Revenue figure will be 12% higher than her 2017 Revenue.

She estimates that her SG&A will go up by $1,000 from 2016-2017 since she plans on getting a part-time employee.

She doesn’t intend to pay any dividends for 2018.

For her Balance Sheet forecasted items she uses only 2017 results, rather than taking an average of the results (average of the % of sales) from 2016 and 2017.

Scarlet assumes Interest Expense, Curr Portion of LT Debt, and Bank Loan Payable will remain the same in 2018 as they were in 2017.

Scarlet plans on issuing $1,000 of (new) Common Stock in 2018.

Scarlet determines that she will need to spend $3,700 for a new Lemon Press machine, which will be her entire CAPEX for 2018. We will assume depreciation will be $200 for this item for 2018, and the yearly depreciation/amortization expense for the rest of Scarlet’s PPE will remain the same as it was in 2017 (and assume no asset sales were made in 2017).

Intangibles and Goodwill will remain unchanged in 2018.

She is not planning on disposing of any of her assets (i.e. no asset sales).

Income Statement
2018 2017
Sales / Revenue 46,592 41,600
Cost of Goods Sold (COGS) ? 24,960
Gross Profit ? 16,640
Selling, General & Administrative (SG&A) 13,940 12,940
Operating Profit ? 3,700
Interest Expense ? 2,000
Income Before Taxes ? 1,700
Income Tax Expense ? 595
Net Income ? 1,105
Assume No Dividends Paid
Balance Sheet
Assets Liabilities and Stockholders' Equity
Current Assets: 2018 2017 2016 Current Liabilities: 2018 2017 2016
Cash ? 2,500 5,495 A/P ? 1,100 300
A/R ? 800 1,300 Deferred Revenue ? 700 1,000
Inventory ? 2,900 1,600 Curr Portion of LT Debt ? 2,200 5,300
Prepaid Rent ? 2,200 1,800 Wages Payable ? 2,600 4,600
Prepaid Insurance ? 1,400 1,900 Tot Curr Liab ? 6,600 11,200
Tot Curr Assets ? 9,800 12,095
LT Liab
LT Assets Bank Loan Payable ? 5,500 3,300
PPE, Gross ? 9,500 5,500 Tot Liab ? 12,100 14,500
Accumul Depr ? 2,800 2,000
PPE, Net ? 6,700 3,500 Stockholders' Equity
Common Stock 4,300 3,300 1,100
Intangibles ? 3,000 3,000 Retained Earnings ? 5,100 3,995
Goodwill ? 1,000 1,000 Total Stockholders' Equity ? 8,400 5,095
Total Assets ? 20,500 19,595 Total Liab + Stockholders' Equity ? 20,500 19,595
2a. PLUG (if necessary): ?
What it tells you: ?
2b. Sustainable Growth Rate (SGR): ?

Find an article dealing with budgeting and prepare a 1 page summary of how you can apply the information to your personal finances.

ARTICLE:

Budgeting is the foundation of personal finance. Whether or not you write a personal budget, use a budget spreadsheet, use a budgeting app, or simply keep track in your head — you’re probably already budgeting.

And budgeting is never more important than in your early adult life as you figure out how to stretch a paycheck, pay off debt, and — hopefully — save a little bit, too.

This page will give you the basic tools you’ll need to start budgeting.

What is a Budget, Exactly?

A monthly budget is a plan for how you will allocate income to meet your expenses for a designated month. Some think of budgets as spending constraints, but budgets are better described as “spending plans”. If you budget correctly you will be able to spend money on things you enjoy without worrying about meeting other financial obligations, overdrawing your accounts, or going into credit card debt.

A monthly budget typically consists of a list describing your income sources and expenses. Each description is followed by the amount you project for the amount of the income or expense for the designated month. A monthly budget can be an Excel spreadsheet, managed within a software program like Quicken, or simply jotted on a piece of notebook paper.

Writing Your Budget

A monthly budget is an estimate, but your goal should be to make as educated an estimate as possible. To do this, you will want to collect a month’s worth of pay stubs, bills, and bank statements, if possible.

INCOME

Assuming you are budgeting for an upcoming calendar month, start by looking at your previous month’s take-home pay.

If you are paid monthly or semi-monthly, this will be easy.

If you are paid every other week, multiply your paycheck by 2.166 to determine your monthly pay.

Paid weekly? Multiply your check amounts by 4.333.

Budgeting is a bit trickier if your main source of monthly income varies (if you work variable hours or earn tips), you can average several months of income or estimate based upon experience. But be conservative. In a month’s time you want to have spent less than you planned for in your budget—a difficult goal when you don’t bank as much cash as you thought.

You also want to take other income sources into account.

Do you work more than one job?

Will you get a bonus next month?

Do you pick up odd gigs or sell old stuff from time to time?

Do you have any investments paying dividends?

Create entries in your monthly budget for these additional income sources and create a line for your total monthly income. This is the amount you have to spend for the month and the basis for your “spending plan”. You cannot spend more than this in any one month. If you anticipate unusually large expenses next month for which you have money saved (a vacation, for example), consider including the savings you will use to pay for the expense as income. This will allow you to see a more typical monthly spending plan despite the inclusion of a non-monthly expense.

EXPENSES

For your monthly budget to work, your expense projections need to be as accurate as possible. Some expenses, like your rent, car payment, and insurance bill, are simple. From there, it gets trickier.

Chances are your utility bills fluctuate from month to month and how much you spend on groceries, dining out, and clothing may vary drastically. Here’s where having a few bills and bank statements will be useful so you can average several month’s worth of data.

Place each expense on a line and write down the amount next to it. You may find it useful to create categories of expenses like:

“Transportation”

“Household”

“Food”

“Entertainment”

“Debt”

Consider expenses that may not be monthly, such as clothing or car maintenance. You should still budget for these items. If you allocate money every month for these things, that money will be available when you do need it.

Tracking and estimating your monthly expenses will be harder, but not impossible, if you frequently pay in cash. While cash is a good way to moderate your spending, you need to be diligent about collecting receipts if you want to know where your money went. A new benefit of credit and debit cards now that you can use them virtually everywhere, even for micro payments of just a few dollars, is at the end of the month you get a statement with all of your monthly expenses on one page. If you’re struggling with credit card debt, definitely stick with debit cards or cash. But if you can learn to use a credit card responsibly and pay it off in full each month, I actually think a good credit card can make budgeting easier.

Your Bottom Line

When you have a complete list of your monthly expenses, add them up and subtract the sum from your monthly income. You should have a positive number. No? Uh-oh. If you have been spending according to this budget, you are going into debt. You will need to find out why your expenses exceed your income and find ways to cut your expenses – fast! Look at your list of expenses and separate discretionary spending. This includes entertainment, travel, gifts, and all dining (including lunches!) Most people can cut their monthly expenses significantly by learning to give up small daily expenditures like coffee or snacks.

If your budgeted expenses fall below your income, congratulations! You are successfully living below your means. The question, now, is how to use your extra money. Follow our six steps to financial stability to help you prioritize your money goals.

Finally, Keep It Simple

If you ever want to build wealth and stay out of debt, you have to spend less than you earn. And a budget can ensure that you do that. Still, rigidly tracking every dime you spend is like counting calories — it sounds good in theory, but most of us fail to keep up with it.

But you can stick with a budget if:

You keep your budget as simple as possible.

You harness the power of automating your money.

After you get a handle on your budget, you’ll be able to focus on other priorities like getting out of debt, building emergency savings, and begin to save for retirement. They aren’t the most exciting financial goals of your lifetime, but once they are out of the way they provide solid footing for financial security for the rest of your life.

Read more at: https://www.moneyunder30.com/budgeting-in-your-twenties

(If possible can you please complete in an excel document)

Excel Project Instructions

Assume ABC Company has asked you to not only prepare their 2015 year-end Balance Sheet but to also provide pro-forma financial statements for 2016. In addition, they have asked you to evaluate their company based on the pro-forma statements with regard to ratios. They also want you to evaluate 3 projects they are considering. Their information is as follows:

End of the year information:

Account

12/31/15

Ending Balance

Cash

50,000

Accounts Receivable

175,000

Inventory

126,00

Equipment

480,000

Accumulated Depreciation

90,000

Accounts Payable

156,000

Short-term Notes Payable

12,000

Long-term Notes Payable

200,000

Common Stock

235,000

Retained Earnings

solve

Additional Information:

Sales for December total 10,000 units. Each month’s sales are expected to exceed the prior month’s results by 5%. The product’s selling price is $25 per unit.

Company policy calls for a given month’s ending inventory to equal 80% of the next month’s expected unit sales. The December 31 2015 inventory is 8,400 units, which complies with the policy. The purchase price is $15 per unit.

Sales representatives’ commissions are 12.5% of sales and are paid in the month of the sales. The sales manager’s monthly salary will be $3,500 in January and $4,000 per month thereafter.

Monthly general and administrative expenses include $8,000 administrative salaries, $5,000 depreciation, and 0.9% monthly interest on the long-term note payable.

The company expects 30% of sales to be for cash and the remaining 70% on credit. Receivables are collected in full in the month following the sale (none is collected in the month of sale).

All merchandise purchases are on credit, and no payables arise from any other transactions. One month’s purchases are fully paid in the next month.

The minimum ending cash balance for all months is $50,000. If necessary, the company borrows enough cash using a short-term note to reach the minimum. Short-term notes require an interest payment of 1% at each month-end (before any repayment). If the ending cash balance exceeds the minimum, the excess will be applied to repaying the short-term notes payable balance.

Dividends of $100,000 are to be declared and paid in February.

No cash payments for income taxes are to be made during the first calendar quarter. Income taxes will be assessed at 35% in the quarter.

Equipment purchases of $55,000 are scheduled for March.

ABC Company’s management is also considering 3 new projects consisting of the purchase of new equipment. The company has limited resources, and may not be able to complete make all 3 purchases. The information is as follows for the purchases below.

Project 1

Project 2

Project 3

Purchase Price

$80,000

$175,000

$22,700

Required Rate of Return

6%

8%

12%

Time Period

3 years

5 years

2 years

Cash Flows – Year 1

$48,000

$85,000

$15,000

Cash Flows – Year 2

$36,000

$74,000

$12,000

Cash Flows – Year 3

$22,000

$38,000

N/A

Cash Flows – Year 4

N/A

$26,800

N/A

Cash Flows – Year 5

N/A

$19,000

N/A

Required Action:

Part A:

Prepare the year-end balance sheet for 2015. Be sure to use proper headings.

Prepare budgets such that the pro-forma financial statements for the first quarter of 2016 may be prepared.

Sales budget, including budgeted sales for April.

Purchases budget, the budgeted cost of goods sold for each month and quarter, and the cost of the March 31 budgeted inventory.

Selling expense budget.

General and administrative expense budget.

Expected cash receipts from customers and the expected March 31 balance of accounts receivable.

Expected cash payments for purchases and the expected March 31 balance of accounts payable.

Cash budget.

Budgeted income statement.

Budgeted statement of retained earnings.

Budgeted balance sheet.

Part B:

Calculate using Excel formulas, the NPV of each of the 3 projects.

It is possible that ABC Company may not be able to complete all 3 projects. Therefore, advise ABC Company as to the order in which they should pursue the projects (i.e., which project should ABC Company attempt to do first, second, and last).

Provide justification and analysis as to why you chose the order you did. The analysis must also be done in Excel, not in a separate document.

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