can someone explain with calculations how they got those values 2. a) (2 pts) Gi

Question

can someone explain with calculations how they got those values

2. a) (2 pts) Given the following Sales Forecasts, what is the expected cash inflow for May and June? Historically, 60% of the purchasers pay in the same month, 30% pay the following month, and 8% pay the second month after purchase. These 2 month late ayersareassesseda5%late fee. March April May June July Sales 100K 90K 110K 80K 70K OK Cash +08 (100k) : 153.36 b) (4 pts) Using the same sales forecast, what should be the budgeted amount needed for purchases for May and June? The Cost of Goods Sold (COGS) percentage is 75%. The desired end of month inventory is $20K plus 60% of the next rmonth's COGS. Mar April May 110K July 70K June Sales COGS Ending Inventory Total S Needed Starting Inventory 0475) 8.5 LoK 52.5K 5bk) / 5l.Sk ?4.SK 13as? 111.SK Seu S 55,5K SSales

Explanation / Answer

a- Ans:- Expected cash flow for May :-

Since sales in May is 110K and 60% of purchasers pay in same month, So cash flow = 0.6*110 = 66K

Cash flow from April = 0.3*90 = 27K

Cash flow from March = 0.08*100*1.05 = 8.4K , Since 2 month late payers are fined 2% late fee.

So, total expected cash flow in May = 66+27+8.4 = 101.4K

Similarly, total expected cash flow from June = (0.6*80) + (0.3*110) +(0.08*90*1.05) = 88.56K

b) Ans:- COGS for May = 0.75*110 = 82.5K

COGS for June = 0.75*80 = 60K

COGS for july = 0.75*70 = 52.5K

Ending inventory for May = $20K + 60% of COGS ofJune = $20K + (0.6*60) = $56K

Similarly ending inventory for June =  $20K + 60% of COGS ofJuly = $20K + (0.6*52.5) = $51.5K

Starting inventory for May =Ending inventory for April =  $20K + 60% of COGS of May = $20K + (0.6*82.5) = $69.5K

So, budgeted amount need for purchases of May = COGS of May+Ending inventoryof May - Starting inventory of May = 82.5 + 56 - 69.5 = 69K

Similarly,  budgeted amount need for purchases of June = COGS of June+Ending inventoryof June - Starting inventory of June = 60 + 51.5 - 56 = 55.5K

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