Task 3: Cash Flow & Budgeting
Using the data below (in US $), prepare a Cash Budget for Alma Corp.
1. Budgeted Sales Data:
|
June |
July |
August |
Cash sales |
90,000 |
215,000 |
185,000 |
Credit
sales |
135,000 |
145,000 |
90,000 |
• Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month.
2. Budgeted Purchase data:
|
June |
July |
August |
Purchases |
300,000 |
250,000 |
105,000 |
• Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase.
3. Other Cash payments:
• Selling expenses are $48,000 each month,
• Rent for the period July-Dec -- will be paid in July - $103,000
• Purchase of equipment in August for $50,000 cash.
4. Other data:
• The company wishes to maintain a minimum cash balance of $40,000 at the end of each month.
• The company borrows money from the bank if necessary to maintain the minimum cash balance. $150 interest was paid in August.
• Borrowed money is repaid in months when there is an excess cash balance.
• The beginning cash balance on July 1 was $50,000.
Cash collection on credit sales:
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