The treasurer of Westmark Industrial Inc., a wholesale distr. of household appliances, wants to estimate his companys cash balances for the first three months of 2015.
Using provided info. construct a monthly cash budget for westmark for Jan. thru March 2015. Westmarks sales are 20% for cash, w/ the rest on 30 day credit terms.
Purchases are all on 60 day terms. Does it appear from your results that the treasurer should be concerned about investing excess cash or looking for a bank loan? may ignore the effect of added borrowing on interest expense.
| Westmark |
| info. ($ thousands) |
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2014(actual) |
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2015(proj.) |
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Oct. |
Nov. |
Dec. |
Jan. |
Feb. |
March |
| Sales |
360 |
420 |
1,200 |
600 |
240 |
240 |
| Purchases |
510 |
540 |
1,200 |
300 |
120 |
120 |
| wages payable monthly |
180 |
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| Princ. pymnt on debt due March |
210 |
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| Interest due in March |
90 |
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| Dividend payable in March |
300 |
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| Taxes payable in Feb. |
180 |
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| Addition to Accum. Deprec. in March |
30 |
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| Cash bal. on Jan. 1, 2015 |
300 |
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| Min. desired cash balance |
150 |
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