18. Create a Cash Budget for the months April through June with the information given below
Determine the amount of financing required(if any)
Sales are shown in the table below: + Month February $10,000 March $40,000 April $50,000 May $75,000 June $85,000 July $90,000 Sales are 30% cash and 70% credit
Sales
Of the credit sales,50% is collected in the month following the sale,and 50% is collected two
months following the sale
Cost of Goods Sold is strictly materials (inventory) and is 55% of sales All inventory purchases are paid for one month after they are made The store follows a policy of purchasing inventory one month in advance of sales A minimum cash balance of S8,000 is desired
Wages from April through June are paid as incurred The corporate tax rate is 35%. No tax payments are due during this quarter A $6,000 dividend payment will be made in April. Ending cash for March was $10,000
Monthly expenses are below:
Wages: April $1500 May $1700 Rent:$700 per month Depreciation:$150 per month
June $1800
Administrative expenses:3% of sales per month paid as incurred
a. Does the firm need to borrow money to maintain their cash balance in any month? If so,which
month(s) and how much?
b. What are the total accounts receivable and accounts payable amounts at the end of the budget period?
