Cash Budget ,Sales Budget by qbw18279

VIEWS: 292 PAGES: 3

More Info
									4-6A. (Cash budget) The Sharpe Corporation’s projected sales for the first eight months of 2004 are as follows: January $ 90,000
February 120,000 March 135,000 April 240,000 May $300,000 June 270,000 July 225,000 August 150,000 Of Sharpe’s sales, 10
percent is for cash, another 60 percent is collected in the month following sale, and 30 percent is collected in the second month
following sale. November and December sales for 2003 were $220,000 and $175,000, respectively. Sharpe purchases its raw materials
two months in advance of its sales equal to 60 percent of their final sales price. The supplier is paid one month after it makes delivery.
For example, purchases for April sales are made in February and payment is made in March. In addition, Sharpe pays $10,000 per
month for rent and $20,000 each month for other expenditures. Tax prepayments of $22,500 are made each quarter, beginning in
March. The company’s cash balance at December 31, 2003, was $22,000; a minimum balance of $15,000
4-6A. (a)     The Sharpe Corporation Cash Budget Worksheet

                     Nov         Dec           Jan           Feb            Mar           Apr          May          June        July
Sales            $220,000     $175,000      $ 90,000      $120,000       $135,000       $240,000     $300,000     $270,000    $225,000
Collections:
 Month of sale (10%)                           9,000        12,000         13,500         24,000       30,000       27,000       22,500
 First month (60%)                           105,000        54,000         72,000         81,000      144,000      180,000      162,000
 Second month (30%)                           66,000        52,500         27,000         36,000       40,500       72,000       90,000
   Total Collections                         180,000       118,500        112,500        141,000      214,500      279,000      274,500
Purchases                        72,000       81,000       144,000        180,000        162,000      135,000       90,000       75,000
Payments (one month lag)                      72,000        81,000        144,000        180,000      162,000      135,000       90,000
Cash Receipts
  (collections)                              180,000       118,500        112,500        141,000      214,500      279,000      274,500
Cash Disbursements
 Purchases                                    72,000         81,000       144,000        180,000      162,000      135,000       90,000
 Rent                                         10,000         10,000        10,000         10,000       10,000       10,000       10,000
 Other Expenditures                           20,000         20,000        20,000         20,000       20,000       20,000       20,000
 Tax Deposits                                                              22,500                                   22,500
 Interest on Short-Term
   Borrowing                                _______        _______        _______         _______         605          386     _______
    Total Disbursements                    $102,000       $111,000       $196,500        $210,000    $192,605     $187,886    $120,000
Net Monthly Change                           $78,000         $7,500      ($84,000)      ($69,000)     $21,895      $91,114    $154,500
Beginning Cash Balance                        22,000        100,000        107,500          23,500     15,000       15,000       67,509
 Additional Financing
   Needed (Repayment)                      ________        _______       ________          60,500     (21,895)     (38,605)    _______
Ending Cash Balance                         $100,000      $107,500        $ 23,500        $15,000     $ 15,000     $ 67,509   $222,009
Cumulative Borrowing                               0             0               0       $ 60,500     $ 38,605            0          0

       (b)    The firm will have sufficient funds to cover the $200,000 note payable due in July. In fact, if the firm's estimates are
              realized they will have $222,009 in cash by the end of July.

								
To top