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Bombs Away Video Games Corporation has forecasted the following monthly sales:

January	$	111,000	July	$	56,000
February		104,000	August		56,000
March		36,000	September		66,000
April		36,000	October		96,000
May		31,000	November		116,000
June		46,000	December		134,000
Total annual sales = $888,000

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.

Of each month's sales, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.

a.	Construct a monthly production and inventory schedule in units. Beginning inventory in January is 36,000 units.

Bombs Away Video Games Corporation
Production and inventory schedule in units
	Beginning inventory	+	Production		Sales	=	Ending inventory
January	36,000
February
March
April
May
June
July
August
September
October
November
December

b.	Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.

Bombs Away Video Games Corporation
Cash Receipts Schedule
	January		February		March		April		May		June
Sales	$		$		$		$		$		$
Cash receipts:
Cash sales	$		$		$		$		$		$
Prior month's credit sales
Total cash receipts	$		$		$		$		$		$

Bombs Away Video Games Corporation
Cash Receipts Schedule
	July		August		September		October		November		December
Sales	$		$		$		$		$		$
Cash receipts:
Cash sales	$		$		$		$		$		$
Prior month's credit sales
Total cash receipts	$		$		$		$		$		$

c.	Prepare a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $56,000 per month.

Bombs Away Video Games Corporation
Cash Payments Schedule
Constant production
	January		February		March		April		May		June
Production cost	$		$		$		$		$		$
Other cash payments
Total cash payments	$		$		$		$		$		$

Bombs Away Video Games Corporation
Cash Payments Schedule
Constant production
	July		August		September		October		November		December
Production cost	$		$		$		$		$		$
Other cash payments
Total cash payments	$		$		$		$		$		$

d.

Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $5,000, which is also the minimum desired. (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.)

Bombs Away Video Games Corporation
Cash Budget
	January		February		March		April		May		June
Beginning cash	$		$		$		$		$		$
Net cash flow
Cumulative cash balance	$		$		$		$		$		$
Monthly loan or (repayment)
Ending cash balance	$		$		$		$		$		$
Cumulative loan balance	$		$		$		$		$		$

Bombs Away Video Games Corporation
Cash Budget
	July		August		September		October		November		December
Beginning cash	$		$		$		$		$		$
Net cash flow
Cumulative cash balance	$		$		$		$		$		$
Monthly loan or (repayment)
Ending cash balance	$		$		$		$		$		$
Cumulative loan balance	$		$		$		$		$		$

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