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Given the following information, construct the firm's cash budget for January, February, and March. 45 percent of...

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Finance

Given the following information, construct the firm's cashbudget for January, February, and March.

  1. 45 percent of sales for credit and are collected after thirtydays; the rest of sales are for cash.
  2. Sales are December: $40,000, January: $43,000, February:$38,000, March: $35,000, and April: $33,000.
  3. Monthly fixed expenses include salaries, rent, and loanrepayments and are estimated to be $9,000.
  4. Variable disbursements include material and wages and areestimated to be 75 percent of next month sales.
  5. A tax payment of $4,500 is due in January.
  6. The initial cash is $3,000.
  7. The company likes to maintain a cash balance of $3,000.

Use Excel for this assignment.

Answer & Explanation Solved by verified expert
4.3 Ratings (672 Votes)

Dear Sir/Mam,

                                   Cash Budget     (All Amounts in Dollar)   
Opening Cash Balance (A) 3000 3000 7850
Receipts:
Sales 41350 40750 36650
Total Receipts (B) 41350 40750 36650
Payments:
Monthly Fixed Expense 9000 9000 9000
Material & Wages 28500 26250 24750
Tax Payment 4500 0 0
Total Payment ( C ) 42000 35250 33750
Balance D=(A+B-C) 2350 8500 10750
Loan Taken* 650 0 0
Loan Paid 0 650 0
Closing Balance 3000 7850 10750

Working Note:

* Loan is taken because in this said company is maintaining $3000 Cash Balance

Particulars December January February March April
Sales $40,000 $43,000 $38,000 $35,000 $33,000
Sales Amount Collected
- Current Month i.e. 45% 18000 19350 17100 15750 14850
- Next month i.e. 55% 22000 23650 20900 19250
Total 41350 40750 36650 34100
Material & Wages i.e 75% of Next Month 28500 26250 24750

I hope this clear your doubt.

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Transcribed Image Text

Given the following information, construct the firm's cashbudget for January, February, and March.45 percent of sales for credit and are collected after thirtydays; the rest of sales are for cash.Sales are December: $40,000, January: $43,000, February:$38,000, March: $35,000, and April: $33,000.Monthly fixed expenses include salaries, rent, and loanrepayments and are estimated to be $9,000.Variable disbursements include material and wages and areestimated to be 75 percent of next month sales.A tax payment of $4,500 is due in January.The initial cash is $3,000.The company likes to maintain a cash balance of $3,000.Use Excel for this assignment.

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