That Fat Cat Company sells cat food in ten-pound bags for $6.20 per bag. Sales estimates for
Question:
That Fat Cat Company sells cat food in ten-pound bags for $6.20 per bag. Sales estimates for the first three months of the year are as follows:
January ' 40,000 bags February 35,000 bags March 30,000 bags December sales were 30,000 bags of cat food. That Fat Cat’s desired ending inventory of cat food each month is 30% of the next month’s sales estimate (in bags). All sales are cash sales. That Fat Cat purchases bags of cat food at $5.20 per bag and pays for them the month after the purchase. General and administrative expenses total $35,000 per month (including $20,000 depreciation), and That Fat Cat pays for these expenses (except for depreciation) in the same month they are incurred. January’s current liabilities (all to be paid in January) total $71,500. The company’s cash balance on January | is $75,000.
Required: Prepare a cash budget for each of the first two months of the year. lp85
Step by Step Answer:
Accounting Information For Business Decisions
ISBN: 9780030224294
1st Edition
Authors: Billie Cunningham, Loren A. Nikolai, John Bazley