please show your work Rick`s company preparing a cash budget for the first two m

ID: 2626668 • Letter: P

Question

please show your work

Rick`s company preparing a cash budget for the first two months of the coming year. The following data have been forecasted:

January

February

Sales

$750,000

$800,000

Purchases

450,000

480,000

Operating expenses:

Payroll

146,800

167,400

Advertising

52,700

62,800

Rent

8,750

Depreciation

23,750

Additional data:
(1) Sales are all on credit. The collection pattern for credit sales is 60% in the month of the sale, 30% in the first month after the sale and 10% in the second month after the sale. Total sales in December of the prior year were $1,000,000.
(2) Purchases are all on credit, with 40% paid in the month of purchase and the balance the following month.
(3) Operating expenses are paid in the month incurred.
(4) The firm desires a minimum cash balance of $100,000 at the end of each month.
(5) Loans are used to maintain the minimum cash balance.

(6) Cash balance at February 1 is $120,000

requierd Prepare the cash budget for February.