(10) la. Given the information that follows, prepare a cash budget for the XYZ S
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Question
(10) la. Given the information that follows, prepare a cash budget for the XYZ Store for the first six months of 2017 All prices and costs remain constant Sales are 87% for credit and 13% for cash With respect to credit sales, 50% are collected in the month after the sale, 35% in the second month, and 15% in the third. Bad-debt losses are insignificant . Sales, actual and estimated, are ( for actual sales) October 2016 November 2016 December 2016 January 2017 February 2017 $240,000* 300,000 280,000* 200,000 230,000 March 2017 April 2017 May 2017 June 2017 July 2017 $240,000 280,000 290,000 240,000 360,000 Merchandises are purchased one month before the anticipated sales at 72% (COGS). Assume all purchases arrived in the same month of ordering, and the company will pay the purchase exactly 1 month after placing the order Wages and salaries are $45,000 40,000 50,000 April 2017 May 2017 June 2017 S55,000 60,000 57,000 January 2017 February 2017 March 2017 Rent is S6,500 a month Interest of $9,500 is due on the last day of each calendar quarter, and no quarterly cash dividends are planned A tax prepayment of $70,000 for 2017 income is due in April A capital investment of $80,000 is planned in June, to be paid for then The company has a cash balance of $80,000 at December 31, 2016, which is the minimum desired level for cash. Funds can be borrowed in multiples of $10,000. (Ignore interest on such borrowings.) .Explanation / Answer
Workings:
Cash Budget For the period of six months from January to June 2017 January February March April May June Total Opening cash balance $80,000 154970 184180 174070 87905 85200 Add: cash collection $2,70,470 $2,41,310 $2,28,690 $2,36,935 $2,62,595 $2,73,930 $15,13,930 Total cash available $3,50,470 $3,96,280 $4,12,870 $4,11,005 $3,50,500 $3,59,130 $22,80,255 Less: cash disbursements Purchases $1,44,000 $1,65,600 $1,72,800 $2,01,600 $2,08,800 $1,72,800 $10,65,600 Wages and salaries $45,000 $40,000 $50,000 $55,000 $60,000 $57,000 $3,07,000 Rent $6,500 $6,500 $6,500 $6,500 $6,500 $6,500 $39,000 Interest $9,500 $9,500 $19,000 Tax prepayment $70,000 $70,000 Capital investment $80,000 $80,000 Total cash disbursements $1,95,500 $2,12,100 $2,38,800 $3,33,100 $2,75,300 $3,25,800 $15,80,600 Excess (deficinecy) of avaialble cash over disbursements $1,54,970 $1,84,180 $1,74,070 $77,905 $75,200 $33,330 $6,99,655 Financing: Borrowing $10,000 $10,000 $50,000 $70,000 Interest Total financing $20,000 $70,000 Ending cash balance $1,54,970 $1,84,180 $1,74,070 $87,905 $85,200 $83,330 $83,330Related Questions
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