MBA5010 Week 8 - Module 22 Team Assignment
ABC Company prepares a cash budget for every quarter of the year. The following budgeted income statement is available:
	April	May	June	July
Sales	$ 45,000	$ 52,000	$ 60,000	$ 75,000
Cost of goods sold	$ 23,500	$ 22,500	$ 30,500	$ 35,000
Gross Profit	$ 21,500	$ 29,500	$ 29,500	$ 40,000
Operating Expenses:
Selling	$ 6,000	$ 8,000	$ 8,500	$ 10,500
Administrative	$ 9,200	$ 10,500	$ 8,500	$ 9,400
Total operating expenses	$ 15,200	$ 18,500	$ 17,000	$ 19,900
Operating Income	$ 6,300	$ 11,000	$ 12,500	$ 20,100
Additional Information:
1. Administrative expenses include depreciation of:			$ 3,500
2. Other expenses, related to cash, are paid in the month incurred.
3. Sales are in cash and on credit:
	Cash sales as a percent of sales		44%
	Credit sales as a percent of sales		56%
4. Cash collections on credit sales follow this pattern:
	Collected in the month of sale		50%
	Collect in the first month after sale		35%
	Collected in the second month after sale		15%
5. Sales for previous months:
	February sales			$ 40,000
	March sales				$ 42,000
6. Merchandise is paid as follows:
	Paid in month of purchase			50%
	Paid in month after purchase		50%
7. Accounts payable for merchandise at April 1:				$ 12,000
8. The company has a policy of maintaining inventory as follows:
	Ending merchandise inventory requirement:	30%	of next month's cost of good sold
9. Ending merchandise inventory at March 31:				$ 7,600
10. Payments for a note payable are as follows:
	April				$ 10,000
	May				$ 10,000
11. ABC wants to maintain a minimum cash balance each month of		$ 10,000
	April 1 cash balance is			$ 10,000
12. ABC can borrow from its bank as needed in multiples of			$ 100
	Interest rate on borrowing			6%
	All borrowings take place at the beginning of the month needed.
	Interest is paid only when the principal is repaid.
	Principal repayments are made when cash is available to do so.
Required:
a) do a monthly schedule of budgeted cash receipt for April, May and June.
b) do a monthly purchases budget for April, May and June.
c) do a monthly cash disbursements budget for merchandise purchases for April, May and June.
d) do a monthly cash budget for April, May and June including short term borrowing needs and repayments to maintain the required minimum cash balance.