Company C has forecast its sales revenues and purchases for the first six months of 2024 as
Question:
Company C has forecast its sales revenues and purchases for the first six months of 2024 as follows:
Sales Purchases January $40,000 $50,000 February 45,000 45,000 March 30,000 40,000 April 35,000 30,000 May 45,000 30,000 June 55,000 20,000 60% of sales are on credit. On the basis of past experience, 50% of the account receivables are collected in the month after sale, and the remainder is collected two months after the sale. Purchases are paid two months after they are incurred. The firm expects to have a cash balance of $5,000 on hand at the end of March, and is required to maintain this as its minimum cash balance.
Required: a) Prepare a schedule of cash receipts for April, May and June.
b) Prepare a cash budget for the same period.
Managerial Accounting
ISBN: 978-0697789938
13th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer