2 3 The following information pertains to Tiffany Company: 5 8 Month January February March Sales (Note 1) Cash balance, March 1st Minimum cash balance at end of each month $ $ $ SSS 9 10 Note 1: All sales are on account. Cash is collected from customers in the following manner. 11 Month of sale 40% 12 Month after sale 60% 13 14 Note 2: Purchases are paid for in the following manner. 5 Month of purchase 6 Month after purchase 7 8 Other information is as follows: 9 Labor costs as % of sales Other operating costs per month Depreciation per month $ $ $ 50,000 $ 60,000 $ 75,000 $ Inventory Purchases (Note 2) 35% 65% 15% 35.000 6,000 20,000 20,000 25,000 20,000 35,000 25 Required: Create a cash budget for the month of March (11 marks) 26 Tiffany Company Cash Budget For the month of March 27 28 Cash balance, beginning 29 Add: cash collections from customers 30 31 Cash payments: 32 Inventory purchases 33 41 34 35 36 Cash excess (deficiency) 37 Financing: 38 Borrowing 39 Repayments 40 Total financing $ 20,000 39 Repayments 40 Total financing 41 42 43 44 45 46 B 44 BONUS (1 MARK): What is the balance of accounts receivable at March 31st? 47 48 49 C O Part 2: Why would Tiffany Company want to prepare a cash budget in advance? Please give two reasons. This must be specific to this question. No marks will be awarded for generic answers. (2 marks) + E 2 3 The following information pertains to Tiffany Company: 5 8 Month January February March Sales (Note 1) Cash balance, March 1st Minimum cash balance at end of each month $ $ $ SSS 9 10 Note 1: All sales are on account. Cash is collected from customers in the following manner. 11 Month of sale 40% 12 Month after sale 60% 13 14 Note 2: Purchases are paid for in the following manner. 5 Month of purchase 6 Month after purchase 7 8 Other information is as follows: 9 Labor costs as % of sales Other operating costs per month Depreciation per month $ $ $ 50,000 $ 60,000 $ 75,000 $ Inventory Purchases (Note 2) 35% 65% 15% 35.000 6,000 20,000 20,000 25,000 20,000 35,000 25 Required: Create a cash budget for the month of March (11 marks) 26 Tiffany Company Cash Budget For the month of March 27 28 Cash balance, beginning 29 Add: cash collections from customers 30 31 Cash payments: 32 Inventory purchases 33 41 34 35 36 Cash excess (deficiency) 37 Financing: 38 Borrowing 39 Repayments 40 Total financing $ 20,000 39 Repayments 40 Total financing 41 42 43 44 45 46 B 44 BONUS (1 MARK): What is the balance of accounts receivable at March 31st? 47 48 49 C O Part 2: Why would Tiffany Company want to prepare a cash budget in advance? Please give two reasons. This must be specific to this question. No marks will be awarded for generic answers. (2 marks) + E