Kent Resom, a recent University of Phoenix graduate with huge potential, has accepted a position as an

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Question:

Kent Resom, a recent University of Phoenix graduate with huge potential, has accepted a position as an entry-level analyst with Builders R Us Manufacturing Company. The president of the company, U. R. Wright, has requested Kent to provide him with a cash flow analysis for the period of April 30 to June 30, which happens to be the end of the current fiscal year. The following information is available

All sales are credit sales, with 20% of sales collected in the month of sales, 60% collected in the month following sales, 15% collected in the second month following the sale, and the remaining 5% written off as bad debt losses in the sixth month following the sale. Raw materials purchased each month are 75% of the next month?s sales. Payment for raw materials is made during the month after the purchase. The company is required to maintain a minimum balance of $5,000 in the checking account, and the balance on April 1 ^st is $6,000. Rent, insurance, and other expenses are $1,000 per month.

Sales and wage data are as follows:

Prepare a cash budget for the period April 30 through June 30. For any month during which a cash shortage is indicated, assume that the Friendly Online National Bank will make funds available. Use the budget worksheet provided to solve the problem.