The BetaBajt company sells computer hardware and software.

The company's (simplified) balance sheet as at December 31, 2020 looks as follows:

ASSETS	Amount ($)	Stakeholders equity and liabilities	Amount ($)
Buildings	70 000	Common shares (40,000 ordinary shares PLN 1 each)	40 000
Other fixed assets	32 000	Preferred shares	75 000
Cash	28 000	Net income	45 000
Other current assets	150 000	Short-term liabilities	120 000
TOTAL	280 000	TOTAL	280 000

The company is developing very fast and the management board decided to take a loan to finance a new business segment: sale of the new generation equipment (SNG)

1. The following equipment is expected to be sold in the four months of the next year:

PREDICTED SALES ASKED IN 2021:

Specification	January	February	March	April
Old equipment	30	55	30	35
SNG*	70	90	110	150

* SNG computers have not been sold yet.

In December 2020, 90 old computers were sold. These computers have been sold for $ 300, however from 1^st March 2021, they will be sold for $ 150 to reduce the level of inventory. The cash are collected to the bank account in the month following the sale.

SNG computers would be sold for $ 400 per item. In order to expand their sales, a policy of receivables giving two-month trade credit.

2. Other sales revenues:

In the current period, the company has received 150 service orders for equipment purchased by customers at $ 300 per item. Customers pay 10% of the value of the purchased equipment annually for this service. Half of the payment is received on 1^st February and the other half the payment on 1^st August. Such orders for SIG are not expected.

Sales of the software brought $ 6,000 in December 2020 and should be the same for January and February 2021. Later, monthly software revenues are expected to increase to $9,000. All revenues from software sales are paid in cash.

3. The profit margin regardless of the type of computer is 35% of its price.

4. Old computers were bought in the amount of 30 items per month, however currently the company stopped purchasing of them (due to the intention to get rid of them completely). SNG was purchased at the level of 100 items per month from October 1, 2020 in order to build up an appropriate stock at the beginning of the sales period. In 2021, the current level of purchases will be maintained. The company pay for the purchased computers in the month following their purchase.

5. Monthly salaries of $ 3,000 are paid in a given month.

6. The royalties are $ 500 per month and are paid quarterly in advance - starting on January 1 of each year.

7. Other variable indirect costs amount to 5% of the value of monthly computer sales revenues - they are paid in the next month.

8. The fixed indirect costs are $1,000 per month and are payable in the month of their creation.

The company's management team applied in the XYZ bank for a loan of $ 40,000.

The Bank required to get cash budget for the next quarter of 2021 including calculations for each month separately.

To respond to the bank request, you are obligated to prepare this cash budget

Answer rating: 100% (QA)

A cash budget is a detailed plan that shows all expected sources and uses of cash when it comes to s... View the full answer