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

January	$	113,000	July	$	58,000
February		106,000	August		58,000
March		38,000	September		68,000
April		38,000	October		98,000
May		33,000	November		118,000
June		48,000	December		136,000
Total annual sales = $912,000

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, 40 percent are for cash and 60 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 38,000 units.

Bombs Away Video Games Corporation
Production and Inventory Schedule in Units
	Beginning Inventory	+	Production		Sales	=	Ending Inventory
January	38,000
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					$0	$0

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						$0

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 $58,000 per month.

Bombs Away Video Games Corporation
Cash Payments Schedule
	January	February	March	April	May	June
Production cost
Other cash payments
Total cash payments						$0

Bombs Away Video Games Corporation
Cash Payments Schedule
	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. (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