James International is in the construction business. In 2010, it is expected that 30 percent of a month's sales will be received in cash, with the balance being received the following month. Of the purchases, 50 percent are paid the following month, 40 percent are paid in two months, and the remaining 10 percent are paid during the month of purchase.

The salesforce receives $1,500 a month base pay plus a 4 percent commission. Labor expenses are expected to be $4,000 a month. Other operating expenses are expected to run about $4,500 a month, including $500 for depreciation. The ending cash balance for 2009 was $18,000.

	Sales	Purchases
2009—Actual
November	$100,000	$60,000
December	150,000	70,000
2010—Budgeted
January	50,000	80,000
February	80,000	60,000
March	60,000	70,000

a. Prepare a cash budget and determine the projected ending cash balances for the first three months of 2010.
b. Determine the months that the company would either borrow or invest cash.

Answer rating: 100% (QA)

Answer a Schedule of expected cash collections November December January February March Sales 100000 ... View the full answer