Given the information that follows, draw a cash budget for the XYZ Store for the first six months of 2012.
- Every prices and costs remain constant.
- Sales are 80% for credit and 20% for cash.
- With respect to credit sales, 55% are collected in the month after the sale, 30% in the second month, and 15% in the third. Bad-debt losses are insignificant.
- Sales, actual and estimated, are:
|
October 2011
|
$300,000
|
March 2012
|
$200,000
|
|
November 2011
|
450,000
|
April 2012
|
350,000
|
|
December 2011
|
400,000
|
May 2012
|
280,000
|
|
January 2012
|
200,000
|
June 2012
|
220,000
|
|
February 2012
|
250,000
|
July 2012
|
320,000
|
- Payments for purchases of merchandise are 90% of the following month's anticipated sales.
- Wages and salaries are:
|
January 2012
|
$40,000
|
April 2012
|
$50,000
|
|
February 2012
|
45,000
|
May 2012
|
45,000
|
|
March 2012
|
55,000
|
June 2012
|
55,000
|
- Rent is $5,000 a month.
- Interest of $8,500 is due on the last day of every calendar quarter, and no quarterly cash dividends are planned.
- A tax prepayment of $60,000 for 2012 income is due in April.
- A capital investment of $60,000 is planned in June, to be paid for then.
- The company has a cash balance of $90,000 at December 31, 2011, which is the minimum desired level for cash. Funds can be borrowed in multiples of $5,000. (Ignore interest on this type of borrowings.)