Excel Project Instructions
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:
Account
12/31/17
Ending Balance
Cash
50,000
Accounts Receivable
175,000
Inventory
126,000
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 XXXXXXXXXXinventory 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 bo
ows 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 Fe
uary.
· 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
Required Action:
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 1 Excel document.
This assignment is due by 11:59 p.m. (ET) on Sunday of Module/Week 7.
Page 3 of 3
Excel Project Grading Ru
ic
Criteria
Levels of Achievement
Content
Advanced
Proficient
Developing
Not present
Earned
Headings and Calculations
28 to 30 points
Balance sheet for 2013 is prepared using proper headings and calculations in Excel.
25 to 27 points
Balance sheet for 2013 is prepared not using proper headings and calculations in Excel.
1 to 24 points
Balance sheet for 2013 is prepared not using headings and calculations in Excel.
0 points
Nothing submitted
Required Budgets
64 to 70 points
Required budgets are presented in Excel, are accurate, and are done with appropriate formulas.
59 to 63 points
Required budgets are presented in Excel, are mostly accurate, and are done with appropriate formulas.
1 to 58 points
Required budgets are presented in Excel; however, most are inaccurate and are not done with appropriate formulas.
0 points
Nothing submitted
Budget Financial Statements
10 points
Budgeted financial statements are presented in Excel, are accurate, and are done with appropriate formulas.
8 to 9 points
Budgeted financial statements are presented in Excel, are mostly accurate, and are done with appropriate formulas.
1 to 7 points
Budgeted financial statements are presented in Excel; however, most are inaccurate, and are not done with appropriate formulas.
0 points
Nothing submitted
NPV Calculations
41 to 45 points
NPV calculations for projects are done in Excel, are accurate, and are done with appropriate formulas.
38 to 40 points
NPV calculations for projects are done in Excel, are mostly accurate, and are done with appropriate formulas.
1 to 37 points
NPV calculations for projects are done in Excel; however, most are inaccurate and not complete with appropriate formulas.
0 points
Nothing submitted
Analysis of Questions
23 to 25 points
Thoughtful analysis of questions posed (considering assumptions, analyzing implications, comparing/contrasting concepts).
21 to 22 points
Analysis of questions posed (considering assumptions, analyzing implications, comparing/contrasting concepts).
1 to 20 points
Shallow Analysis of questions posed (considering assumptions, analyzing implications, comparing/contrasting concepts).
0 points
Nothing submitted
Total Points
/180
Instructor’s Comments: