ABC Company, a wooden products manufacturer, is developing a cash budget for March, April, and May. Its sales in January and February were $$150,000$ and $$300,000$ respectively. Sales of $$180,000,$ $$210,000$ and $$120,000$ have been forecasted for March, April, and May. In general terms, $40\%$ of the firm$$s sales have been for cash, $35\%$ have been collected after $1$ month, and the remaining $25\%$ after $2$ months. In April, Coulson will receive a $$25,000$ dividend from stock in a subsidiary.

ABC's purchases will represent $65\%$ of sales$30\%$ will be paid immediately in cash, $55\%$ is paid the month following the purchase, and the remaining $15\%$ is paid two months following the purchase. The firm will also expend cash on rent $($$$11\mathrm{.}000$ every month$),$ wages and salaries $($$$50\mathrm{.}000,$ $$37\mathrm{.}000$ and $$29\mathrm{.}000$ each month respectively$),$ taxes $($$$15\mathrm{.}000$ in April$),$ and fixed assets $($$$90\mathrm{.}000$ in May$).$

The Cash Budget for ABC can be derived by combining the receipts budget with the disbursements budget. At the end of December, its cash balance was $$35,000.$ The company also wishes to maintain a minimum cash balance of $$15,000.$ Please project the cash budget and determine what will be the decision in each month: to invest $($and how much$)$ or to ask for money $($how much$).$

Answer rating: 100% (QA)

March Cash Budget Beginning Cash Balance 35000 Receipts Cash Sales 40 of 180000 72000 Collections fr... View the full answer