One day in March 2013, John Sutherland, industrial commissioner for the city of South Elk, received a
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The marketing department provided the following sales forecast:
July ..............................................$ 50,000
August ..........................................100,000
September ....................................500,000
October ........................................650,000
November ....................................550,000
December ....................................400,000
January ........................................200,000
Ten percent of sales are for cash, 40% of sales are collected after 30 days, and the remaining 50% after 60 days. Purchases, which are 80% of sales, are incurred in the month in which the sales are made. These goods are paid 30% in cash and 70% within 30 days. Distribution and administrative expenses are $10,000 per month, plus 1% of monthly sales. Start-up costs in July are $30,000. Income taxes for the entire operating period are paid in April and are 40% of the profit. The monthly depreciation is $10,000. The company feels that it is necessary to maintain a minimum cash balance of $25,000 during the selling season.
The cash balance on July 1 is $75,000.
Prepare a monthly cash budget from July 1, 2013 to January 31, 2014. 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... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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