Chapter 16 Assignment Input Data Collections during month of sale 20% Collection
ID: 2734225 • Letter: C
Question
Chapter 16 Assignment
Input Data
Collections during month of sale 20%
Collections during month after sale 50%
Collections during second month after sale 30%
Lease Payments $12,000
Target Cash Balance $125,000
General and Admin. Salaries $35,000
Depreciation Charges $30,000
Income Tax Payments (March & June) $74,000
Miscellaneous expenses $5000
New van for deliveries (May) $35,000
Cash on hand March 1st $100,000
Mark Smith, owner of MS Inc. is planning to request a line of credit from his bank. She has prepared the following sales forecasts for 2013.
Sales Labor and Raw Materials
January 220,000 110,000
February 220,000 110,000
March 400,000 200,000
April 600,000 500,000
May 800,000 420,000
June 400,000 200,000
July 400,000 200,000
August 150,000 250,000
September 300,000 N/A
Prepare a monthly cash budget for March thru August.
Jan. Feb. Mar. Apr. May June Jul. Aug. Sept.
Sales (gross)
Collections
During month of sale
1st month after sale
2nd month after sale
Total collections
Purchases
Labor and raw materials
Payment for Labor
And raw materials
G&A salaries
Lease payments
Misc. expenses
Income Tax exp.
Van
Total Payments
Net Cash Flows
Cash on hand at start of forecast period
Net Cash Flow (NCF)
Cumulative NCF
Cash Surplus (or Loan)
Target cash balance
Surplus or loan needed
Payments for labor and raw materials are paid in the following month.
Comment
Explanation / Answer
Monthly cash budget for March thru August.
Payment for Labour and Raw material
Note:-
1. Depreciation Charges are non cash item therefore not included in cash budget
2. Payments for labor and raw materials are paid in the following month, therefore Feb amount paid in March and so on.
3. Computation of Collections
Collections
Particulars Mar Apr May June July Aug Sales (Gross) $400,000 $600,000 $800,000 $400,000 $400,000 $150,000 Collections During the month $80,000 $120,000 $160,000 $80,000 $80,000 $30,000 1st month after sale $110,000 $200,000 $300,000 $400,000 $200,000 $200,000 2nd month after sale $66,000 $66,000 $120,000 $180,000 $240,000 $120,000 Total Collection $256,000 $386,000 $580,000 $660,000 $520,000 $350,000 PaymentsPayment for Labour and Raw material
$110,000 $200,000 $500,000 $420,000 $200,000 $200,000 G&A salaries $35,000 $35,000 $35,000 $35,000 $35,000 $35,000 Lease payments $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 Misc. expenses $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 Income Tax Expenses $74,000 $74,000 Van $35,000 Total Payments $236,000 $252,000 $587,000 $546,000 $252,000 $252,000 Net Cash Flows( Total Collections- Total Payments) $20,000 $134,000 -$7,000 $114,000 $268,000 $98,000 Cash in Hand $100,000 $120,000 $254,000 $247,000 $361,000 $629,000 Cummulative Net Cash Flow ( Net Cash Flow +Cash In Hand) $120,000 $254,000 $247,000 $361,000 $629,000 $727,000 Target Cash Balance $125,000 $125,000 $125,000 $125,000 $125,000 $125,000 Surplus/ (Loan Needed) ($5,000) $129,000 $122,000 $236,000 $504,000 $602,000Related Questions
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