1: Prepare a sales budget, including a schedule of expected cash collections.
2: prepare a merchandise purchase budget, including a schedule of expected cash disbursements for merchandise, and a selling and administrative budget.
3: prepare a cash budget.
MOST LIKELY NUMBERS AND ASSUMPTIONS SALES MANAGER PRIVATE INFORMATION October Most likely sales 600,000 910,000 475,000 385,000 PURCHASING MANAGER PRIVATE INFORMATION Most likely cost of merchandise as a % of sales Desired ending inventory as a percentage of next month's cost of sales 45% 20% OPERATION MANAGER PRIVATE INFORMATION Most likely shipping expenses as a percent of sales Most likely other expenses as a percent of sales Salaries and wages (per month) Most likely advertising costs (per month) Most likely insurance costs (per month Depreciation expense (per month) 5.0% 8.0% 85,000 50,000 3,000 25,000 FINANCE MANAGER PRIVATE INFORMATION Percent sales collected in month of sale Percent sales collected in month after sale 30% 70% Percent of inventory purchases paid in month of purchase Percent of inventory purchases paid in month after purchase 50% 50% Percent of operating expenses paid in month of purchase Percent of operating expenses paid in month after purchase 100% 0% Desired minimum ending cash balance each month Borrow in increments of Monthly interest rate on borrowings (not 35,000 1,000 1% compounded) Other planned outlays of cash Capital expenditures 90 50,000 S Sales Budget uly August September Quarter Sales Schedule of Cash Collections July August September Quarter June sales (A/R From Beginning Balance Sheet) July sales-Collected in Current Month July sales-Collected in Following Month August sales-Collected in Current Month August sales-Collected in Following Month September sales-Collected in Current Month Total Expected Cash Collections Total Sales for the Quarter A/R at the end of the Quarter(September Sales Still not Collected) Inventory Purchase Budget August September October Sales Cost of Merchandise as % of Sales Budgeted Cost of Merchandise Sold Following Month's COGS Desired Ending inventory % Desired Ending Inventory Dollars Budgeted Cost of Merchandise Sold Plus Desired Ending Inventory Total Inventory Needs Less Beginning Inventory Required Purchases Schedule of Expected Cash Disbursements Purchases July August September Quarter June Purchases (A/P From Balance Sheet) July Purchases August Purchases September Purchases Total Disbursements Cost of Merchandise Sold for the Quarter Ending Inventory at the end of the Quarter Ending AP at the end of the Quarter Selling and Administrative Budget August September Quarter Sales Shipping as a Percentage of Sales Other Expenses as a Percentage of Sales Variable Expenses: Shipping Other Expenses Total Variable Expenses Fixed Expenses Salaries and Wages Advertising Prepaid Insurance Depreciation Total Fixed Expesnes Total Selling and Admin Expenses Less Noncash Items (Depreciation and Prepaid Ins) Total Cash Disbursements Prepaid Insurance That is Expensed During the Quarter Depreciation Expense Recognized During the Quarter Cash Budget August Jul September Quarter Cash Balance: Beginning Add Cash Collections (From Sales Budget) Total cash Available Less Cash Disbursements For Inventory (From Purchasing Budget) For Operating Expenses (From Selling and Admin Budget) For Equipment For Cash Dividends For Interest (From Previous Month's Borrowing) Total Cash Disbursements Excess (Deficiency)of Cash Financing Borrowing Repayment Total Financing Cash Balance: Ending Outstanding Loan Balance Interest on Borrowing (Due the Following Quarter)