Question

A firm has estimated its sales, purchases from suppliers, and wages and miscellaneous operating cash outlays for the first four months of next year as follows:


It estimates that 50 percent of its sales will be for cash, and that it will receive the remaining portion in two equal amounts at the end of the subsequent two months. It plans to pay for all of its purchases two months after the purchase date.
The firm is scheduled to pay dividends of $40,000 in January, and to pay $20,000 for new equipment in March. Its beginning cash balance is $30,000, and the firm wishes to maintain a minimum balance of $10,000. Wages & misc. must be paid monthly without delay. Estimate the firm’s cash budget for the first four months of next year. Assume that the sales and purchases were the same in November and December as they are estimated to be inJanuary.


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  • CreatedFebruary 25, 2015
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