=+10-38 KKK Cash budgeting (Appendix 10-1)

On 1 December 2014, Izumi Wholesalers is attempting to project cash receipts and disbursements to 31 January 2015. On this date, a note will be payable in the amount of $100000. This amount was borrowed in September to carry the company through the seasonal peak in November and December.

Selected general ledger balances on 1 December are:

Cash $88 000 Inventory 65 200 Accounts payable 136 000 Sales terms call for a 3% discount if payment is made within the first 10 days of the month after sale, with the balance due by the end of the month after sale. Experience has shown that 50% of the billings will be collected within the discount period, 30% by the end of the month after purchase and 14% in the following month. The remaining 6% will be uncollectable. There are no cash sales.

The average selling price of the company’s products is $100 per unit. Actual and projected sales are:

October actual $280 000 November actual 320 000 December estimated 330 000 January estimated 250 000 February estimated 240 000