2. (Cash Disbursements) Snobby Crab Shack expects to make purchases in the first

Question

2.     (Cash Disbursements) Snobby Crab Shack expects to make purchases in the first quarter of 2009 as follows:

                                              January           $84,000

                                                February              $96,000

                                                March                   $78,000

Purchases in December in 2008 are expected to be $87,000. The company expects that 55% of a month’s purchases will be paid in the month of purchase and 45% will be paid in the following month. Other cash operating expenses per month are $60,000. In addition, the company has $8,000 of depreciation per month.

Estimate cash disbursements related to purchases for each month of the first quarter of 2009. What are the accounts payable related to purchases at March 31, 2009?

3.      (Cash Budget) Snobby Crab Shack has a cash balance at December 31, 2008 of $4,050 and wants to maintain an ending cash balance of $2,000 per month, what is the cash balance at the end of January, February and March 2009 (assume any loans are non-interest bearing).

Explanation / Answer

Cash budget Snooby Crab Shack A B C D E F I H J J*45% J*55% C+D+E B-F-H month opening purchase pymt operating expense this month purchase total cash disbursement required loan ending BALANCE purchases dec 4050 60000 47850 107850 -105800 2000 87000 jan 2000 39150 60000 46200 145350 -145350 2000 84000 feb 2000 37800 60000 52800 150600 -150600 2000 96000 march 2000 43200 60000 42900 146100 -146100 2000 78000

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