Problem: The following is a forecast of sales and purchases by American Food Products for the first four months of 2006.
|
month1
|
month2
|
month3
|
month4
|
|
|
|
|
|
|
|
|
|
|
credit sales
|
250,000.00
|
285,000.00
|
265,000.00
|
240,000.00
|
|
|
|
|
|
|
|
|
|
|
credit purchases
|
120,000.00
|
140,000.00
|
130,000.00
|
110,000.00
|
|
|
|
|
|
Insurance, rent, wages, and other expenses are 2%, 5%, 8%, and 1% of sales respectively.
Notes:
1. On the average 70% of credit sales is paid in the month of sales, and 30% one month following sales.
2. On the average 50% of credit purchases is paid in the month of purchase, 50% one month following purchase.
REQUIRED: Prepare a simple cash budget for the next four months of 2006.