Excess cash the months Octob a. Prepare a quarterly cash budget for Sam and Suzy

Question

Excess cash the months Octob a. Prepare a quarterly cash budget for Sam and Suzy covering the m through December 2020 b. Are there individual months that incur a deficit? c. What is the cumulative cash surplus or deficit by the end of December : Advanced The actual sales and purchases for Xenocore Inc tember an November 2019 through April 2020, follow. The firm makes 20% of all sales for cash and collects on 40% of its salo. each of the 2 months following the sale. Other cash inflows are expected to $12,000 in September and April, $15,000 in January and March, and $27,000 February. The firm pays cash for 10% of its purchases. It pays for 50% of chases in the following month and for 40% of its purchases 2 months later. its. Din pur Year 2019 2019 2019 2019 2020 2020 2020 2020 Month September October November December January February March April Sales $210,000 250,000 170,000 160,000 140,000 180,000 200,000 250,000 Purchases $120,000 150,000 140,000 100,000 80,000 110,000 100,000 90,000

Explanation / Answer

Xenocore, Inc. Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr. Forecast Sales $210,000.00 $250,000.00 $170,000.00 $160,000.00 $140,000.00 $180,000.00 $200,000.00 $250,000.00 Cash sales = 20% $34,000.00 $32,000.00 $28,000.00 $36,000.00 $40,000.00 $50,000.00 Collections Lag 1 month (40%) $100,000.00 $68,000.00 $64,000.00 $56,000.00 $72,000.00 $80,000.00 Lag 2 month (40%) $84,000.00 $100,000.00 $68,000.00 $64,000.00 $56,000.00 $72,000.00 Other cash receipts $15,000.00 $27,000.00 $15,000.00 $12,000.00 Total cash receipts $218,000.00 $200,000.00 $175,000.00 $183,000.00 $183,000.00 $214,000.00 Forecast Purchases $120,000.00 $150,000.00 $140,000.00 $100,000.00 $80,000.00 $110,000.00 $100,000.00 $90,000.00 Cash purchases Payments = 10% $14,000.00 $10,000.00 $8,000.00 $11,000.00 $10,000.00 $9,000.00 Lag 1 month (50%) $75,000.00 $70,000.00 $50,000.00 $40,000.00 $55,000.00 $50,000.00 Lag 2 months (40%) $48,000.00 $60,000.00 $56,000.00 $40,000.00 $32,000.00 $44,000.00 Salaries & wages 20% x Preceding Month sales $50,000.00 $34,000.00 $32,000.00 $28,000.00 $36,000.00 $40,000.00 Rent $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 $20,000.00 Interest payments $10,000.00 $10,000.00 Principal payments $30,000.00 Dividend $20,000.00 $20,000.00 Taxes $80,000.00 Purchases of fixed assets $25,000.00 Total cash disbursements $207,000.00 $219,000.00 $196,000.00 $139,000.00 $153,000.00 $303,000.00 Total cash receipts $218,000.00 $200,000.00 $175,000.00 $183,000.00 $183,000.00 $214,000.00 Less: Total cash disbursements $207,000.00 $219,000.00 $196,000.00 $139,000.00 $153,000.00 $303,000.00 Net cash flow $11,000.00 -$19,000.00 -$21,000.00 $44,000.00 $30,000.00 -$89,000.00 Add: Beginning cash $22,000.00 $33,000.00 $14,000.00 -$7,000.00 $37,000.00 $67,000.00 Ending cash $33,000.00 $14,000.00 -$7,000.00 $37,000.00 $67,000.00 -$22,000.00 Less: Minimum cash Balance $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 $15,000.00 Required total financing (Notes payable) $1,000.00 $22,000.00 $37,000.00 Excess cash balance (Marketable securities ) $18,000.00 $0.00 $0.00 $22,000.00 $52,000.00 The line of credit should be at $50,000 to cover the maximum borrowing needs for the month of November to April

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