Excel – Balance Sheet Project

Please see attached word document. Note: Final doc type is excel.

EXCEL PROJECT ASSIGNMENT INSTRUCTIONS
Note: Your assignment will be checked for originality via the Turnitin
plagiarism tool.
OVERVIEW
Assume ABC Company has asked you to not only prepare their 2017 year-end Balance Sheet but
to also provide pro-forma financial statements for 2018. 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:
12/31/17
Account
Ending Balance
Cash
Accounts Receivable
Inventory
Equipment
Accumulated Depreciation
Accounts Payable
Short-term Notes Payable
Long-term Notes Payable
Common Stock
Retained Earnings
50,000
175,000
126,000
480,000
90,000
156,000
12,000
200,000
235,000
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 2017 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
$13,000
Cash Flows – Year 2
$36,000
$74,000
$13,000
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
INSTRUCTIONS
Part A:
•
Prepare the year-end balance sheet for 2017. Be sure to use proper headings.
•
Prepare budgets such that the pro-forma financial statements for the first quarter of 2018
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.
This assignment must be submitted as one Excel document.
Note: Your assignment will be checked for originality via the Turnitin
plagiarism tool.