The financial staff of the Romulians Co. has compiled the following set of assumptions and forecasts...
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The financial staff of the Romulians Co. has compiled the following set of assumptions and forecasts to be used in the cash budgeting process: 1) Actual sales for November and December 2009 are given and expected sales for January to July are given. 2) 50% of sales are for cash. Of the remaining sales, 60% are collected in the following month and 40% are collected two months after the sale. 3) Actual purchases for November and December 2009 are given. Inventory purchases are equal to 50% of the following month's sales. 4) 50% of purchases are paid for in the month following the purchase, and the remainder are paid in the following month. 5) Annual borrowing rate is 7%. 6) Wages, taxes and other expenses are expected to be 40% of forecasted sales. 7) A major capital expenditure of $150,000 is expected in April. 8) Interest payments are expected to be 550,000 every month. 9) The beginning cash balance in January 2010 is $25,000, and the company needs a minimum cash balance of $20,000, Required: Help the financial staff of the Romulians Co., to prepare their cash budget for January to June 2010. Sales Collections: Cash First Month Second Month Total Collections Purchases Payments First Month Second Month Total Payments Collections Less Disbursements: Inventory Payments Wages, Tax and Other Exp Interest Payments Capital Spenditure Short-Term Interest Exp. Total Disbursements Beginning Cash Balance Collections Disbursement Unadjusted Cash Balance Current Borrowing Ending Cash Balance Cumulative Borrowing Notes: Minimum Acceptable Cash Borrowing Rate (Annual) Monthly 50% 30% 20% 50% 50% 50% 40% 20,000 7% ??? November 470,000 148,000 Romulians Co. Cash Budget For the Period January to June 2010 January February 436,500 547,500 December 282,000 111,000 25,000 3 ??? ??? ??? 327 ??? 727 ??? ??? 777 50,000 0 222 777 222 777 777 ??? 999 337 227 ??? 727 272 777 777 ??? 50,000 0 222 227 229 777 222 222 727 March 580,500 ??? ??? ??? 227 ??? 777 ??? 777 ??? 50,000 0 272 222 777 727 777 April 493,500 ??? ??? 222 222 222 772 227 222 ??? 277 ??? 50,000 150,000 222 777 229 ??? 227 222 777 May 357.000 ??? ??? ??? 727 ??? ??? 727 ??? 777 777 50,000 0 222 777 772 777 727 772 June 217,500 ??? 222 **F 222 227 777 777 222 ??? 227 ??? 50,000 0 227 777 229 ??? 277 222 ??? 138,000 The financial staff of the Romulians Co. has compiled the following set of assumptions and forecasts to be used in the cash budgeting process: 1) Actual sales for November and December 2009 are given and expected sales for January to July are given. 2) 50% of sales are for cash. Of the remaining sales, 60% are collected in the following month and 40% are collected two months after the sale. 3) Actual purchases for November and December 2009 are given. Inventory purchases are equal to 50% of the following month's sales. 4) 50% of purchases are paid for in the month following the purchase, and the remainder are paid in the following month. 5) Annual borrowing rate is 7%. 6) Wages, taxes and other expenses are expected to be 40% of forecasted sales. 7) A major capital expenditure of $150,000 is expected in April. 8) Interest payments are expected to be 550,000 every month. 9) The beginning cash balance in January 2010 is $25,000, and the company needs a minimum cash balance of $20,000, Required: Help the financial staff of the Romulians Co., to prepare their cash budget for January to June 2010. Sales Collections: Cash First Month Second Month Total Collections Purchases Payments First Month Second Month Total Payments Collections Less Disbursements: Inventory Payments Wages, Tax and Other Exp Interest Payments Capital Spenditure Short-Term Interest Exp. Total Disbursements Beginning Cash Balance Collections Disbursement Unadjusted Cash Balance Current Borrowing Ending Cash Balance Cumulative Borrowing Notes: Minimum Acceptable Cash Borrowing Rate (Annual) Monthly 50% 30% 20% 50% 50% 50% 40% 20,000 7% ??? November 470,000 148,000 Romulians Co. Cash Budget For the Period January to June 2010 January February 436,500 547,500 December 282,000 111,000 25,000 3 ??? ??? ??? 327 ??? 727 ??? ??? 777 50,000 0 222 777 222 777 777 ??? 999 337 227 ??? 727 272 777 777 ??? 50,000 0 222 227 229 777 222 222 727 March 580,500 ??? ??? ??? 227 ??? 777 ??? 777 ??? 50,000 0 272 222 777 727 777 April 493,500 ??? ??? 222 222 222 772 227 222 ??? 277 ??? 50,000 150,000 222 777 229 ??? 227 222 777 May 357.000 ??? ??? ??? 727 ??? ??? 727 ??? 777 777 50,000 0 222 777 772 777 727 772 June 217,500 ??? 222 **F 222 227 777 777 222 ??? 227 ??? 50,000 0 227 777 229 ??? 277 222 ??? 138,000
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Sales Collections Cash First Month Second Month Total Collections Purchases Payments First Month Sec... View the full answer
Related Book For
Intermediate Financial Management
ISBN: 978-1285850030
12th edition
Authors: Eugene F. Brigham, Phillip R. Daves
Posted Date:
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