A firm has the following monthly pattern of sales: January..........$ 100 February..........300 March..........500 April..........1,000 May..........500 June..........300 Sixty

Question:

A firm has the following monthly pattern of sales:

January..........$ 100

February..........300

March..........500

April..........1,000

May..........500

June..........300

Sixty percent of the sales are on credit and are collected after a month. The company pays wages each month that are 60 percent of sales and has fixed disbursements (for example, rent) of $100 a month. In March it receives $200 from a bond that matures; in April and June it makes a tax payment of $200. Management maintains a cash balance of $150 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $150.

Cash Budget
A cash budget is an estimation of the cash flows for a business over a specific period of time. These cash inflows and outflows include revenues collected, expenses paid, and loans receipts and payment. Its primary purpose is to provide the...