Of its monthly sales, The Kingsman Company historically has had 25-percent cash sales with the remainder paid within one month. Each month’s purchases are equal to 75 percent of the next month’s sales forecast; suppliers are paid one month after the purchase. Salary expenses are $50,000 a month, except in January when bonuses equal to 1 percent of the previous year’s sales are paid out. Interest on a bond issue of $10,000 is due in March. Overhead and utilities are expected to be $25,000 monthly. Dividends of $45,000 are to be paid in March. Kingsman’s 2014 sales totaled $2 million; December sales were $200,000. Kingsman’s estimated sales for January are $100,000; February, $200,000; March, $250,000, and April, $300,000.
a. What are Kingsman’s expected monthly cash inflows during January through April?
b. What are Kingsman’s expected monthly cash outflows during January through April?
c. Determine Kingman’s monthly cash budget for January through April. Assume a minimum desired cash balance of $40,000 and an ending December cash balance of $50,000.

  • CreatedMarch 27, 2015
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