The ABC Company sales for December 2019 and forecast for the first three months of 2020...

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The ABC Company sales for December 2019 and forecast for the first three months of 2020 are as follows: 2019 2020 2020 2020 Month December January February March Sales 40,000 39,000 44,000 55,000 Additional information provided is as follows: (1) Raw material is purchased each month at 80% of the previous month's sales. The supplier is paid a month of delivery. For example, purchases for January are based on sales for December and payment is made in January. (ii) Seventy percent (60%) of sales will be for cash, while the remaining 40% will be collected in the first month following the sale. (iii) Wages total $3,500 each month. (iv) Other expense is $2,900 each month. (v) Taxes will be paid on March 31: $2,250 (vi) Equipment costing $7,000 was sourced. A discount of $2,000 was negotiated. The equipment will be delivered in February and will be paid for cash on delivery. (vii) The ABC Company's cash balance on 31 December 2019 was $7,500. However, the firm has decided to use $10,000 as the minimum balance applied going forward. (viii) Short-term credit is arranged at an interest rate of 12 percent per annum (1 percent per month) to be paid monthly. The interest on any short-term borrowing is paid in the month after it is incurred. Required: Use the information above to prepare the cash budget for The ABC Company covering January to March 2020. The ABC Company sales for December 2019 and forecast for the first three months of 2020 are as follows: 2019 2020 2020 2020 Month December January February March Sales 40,000 39,000 44,000 55,000 Additional information provided is as follows: (1) Raw material is purchased each month at 80% of the previous month's sales. The supplier is paid a month of delivery. For example, purchases for January are based on sales for December and payment is made in January. (ii) Seventy percent (60%) of sales will be for cash, while the remaining 40% will be collected in the first month following the sale. (iii) Wages total $3,500 each month. (iv) Other expense is $2,900 each month. (v) Taxes will be paid on March 31: $2,250 (vi) Equipment costing $7,000 was sourced. A discount of $2,000 was negotiated. The equipment will be delivered in February and will be paid for cash on delivery. (vii) The ABC Company's cash balance on 31 December 2019 was $7,500. However, the firm has decided to use $10,000 as the minimum balance applied going forward. (viii) Short-term credit is arranged at an interest rate of 12 percent per annum (1 percent per month) to be paid monthly. The interest on any short-term borrowing is paid in the month after it is incurred. Required: Use the information above to prepare the cash budget for The ABC Company covering January to March 2020.

Answer rating: 100% (QA)

Cash Add Purchases Wages Expenses Taxes Equipment Total Cash Disbursemen... View the full answer