Part I.

Exercise 3
1. e Part 1
2. g Projected Sales in 2016 5,750,000
3. a Target Level of Ending Inventories 400,000
4. i Less:Target Level of Beginning Inventories 250,000
5. b Number of Units 5,900,000
6. j Part 2
7. d Quarter Year
8. f Q1 Q2 Q3 Q4
9. c Projected Sales 3,500,000 4,500,000 5,000,000 8,000,000 21,000,000
Target Level of Ending
10. h Inventories 500,000 500,000 1,000,000 550,000 2,550,000
Total 4,000,000 5,000,000 6,000,000 8,550,000 23,550,000
Less:Beginning Inventory 450,000 500,000 500,000 1,000,000 2,450,000
3. Statement of Comprehensive Income Required Production 3,550,000 4,500,000 5,500,000 7,550,000 21,100,000
XYZ Company Part 3
Statement of Comprehensive Income Quarter Year
For the Year Ending 31 December 2020 Q1 Q2 Q3 Q4
(in thousands) Projected Sales 8,000 6,000 8,500 12,500 35,000
Target Level of Ending
Sales 205,440 Inventories 1,500 3,000 5,000 3,000 12,500
Less: Operating Expense 163,200 Total 9,500 9,000 13,500 15,500 47,500
EBITDA 42,240 Less:Beginning Inventory 2,500 1,500 3,000 5,000 12,000
Depreciation and Amortization 3,500 Required Production 7,000 7,500 10,500 10,500 35,500
EBIT 38,740 Part 4
ASC Merchandising Co. has a more conservative working capital financing policy as its current
Less: Interest 1750 equities (2,000,000) are lower than J&J Co.'s (5,000,000).
EBT 36,990
Taxes (30%) 11097
Net Income 25,893

Part 4
DG Stores
Sales Budget
For the Year Ending 31 December 2019
Q1 Q2 Q3 Q4
Sales 12,000,000 15,000,000 15,000,000 18,000,000
Opening cash balance 750,000 2,125,000 2,890,000 3,900,000
Cash received of Current Sale 8,400,000 10,500,000 10,500,000 12,600,000
Cash received of Previous Sale 4,500,000 3,600,000 4,500,000 4,500,000
Total Cash Collection 12,900,000 14,100,000 15,000,000 17,100,000
Less:
Cost of Sale 9,000,000 11,250,000 11,250,000 13,500,000
Cash Paid of Current Quarter 8,100,000 10,125,000 10,125,000 12,150,000
Cash Paid of Previous Quarter 1,125,000 900,000 1,125,000 1,125,000
Fixed Operating Expenses 1,000,000 1,000,000 1,250,000 1,250,000
Variable Operating Expenses 600,000 750,000 750,000 900,000
Interest Payment 200,000 200,000 200,000 200,000
Tax 500,000 360,000 540,000 465,000
Total Cash Payment 11,525,000 13,335,000 13,990,000 16,090,000
Ending cash balance 2,125,000 2,890,000 3,900,000 4,910,000