3. Budgeting for cash Which of the following statements are true with regard to a cash budget? Check all that apply. Cash budgets provide less specific financial information than the percentage-of-sales method and the statement of cash flows. Annual budgeting information usually provides sufficient information to manage most companies. The three sections of a cash budget, in order, are the cash collections schedule, the disbursements schedule, and the cash balance reconciliation An advantage of the cash budget over other financial forecasting tools is its ability to reflect the precise timing and magnitudes of a firm's expected cash inflows and outhows. Assume that Lincoln Co. has the following accounts receivable pattern: 20% Month of sale Month following the sale 80% All sales are on credit. Il sales in April and May are budgeted to be $900,000 and $1,000,000, respectively, the cash expected to be collected in May is Lincoln Co. purchases raw materials on account. Some of Lincoln's suppliers do not offer discounts and require payment the month following the purchase. Other suppliers sell on credit terms of 2/10 net 30, which means that Lincoln can take a 2% discount and pay 98% of the invoiced amount the invoice is paid within 10 days. If the invoice is not paid within 30 days of making the purchase, then Lincoln must pay the full amount (100%) of the invoice. Lincoln's policy is to take advantage of available cash discounts by paying on day 10 and to make payments to suppliers who do not offer discounts on day 30 All sales are on credit. If sales in April and May are budgeted to be $900,000 and $1,000,000, respectively, the cash expected to be collected in May is 51,000,000 chases raw materials on account. Some of Lincoln's suppliers do not offer discounts and require payment the month following the $1,350,000 suppliers sell on credit terms of 2/10 net 30. which means that Lincoln can take a 2% discount and pay 98% of the invoiced amount ir paid within 10 days. If the invoice is not paid within 30 days of making the purchase, then Lincoln must pay the full amount (100%) of $980.000 coin's policy is to take advantage of available cash discounts by paying on day 10 and to make payments to suppliers who do not affer $1,900,000 Y 30 At the beginning of the year, Lincoln's account payable balance is $50.000. All available discounts have been taken, and the balance will be paid in January, Given the following planned purchases for the next few months, determine the amount of cash that must be available each month to pay for the firm's purchases: Monthly Cash Requirement January February March planned Purchases Discounted at 2/10 Net 30 570,000 $70,000 $70,000 Planned Purchases without Discounts $30,000 $30,000 $60,000 Grade It Now Save & Continue beginning of the year, Lincoln's account payable balance is $50,000. All available discounts have been taken, and $100,000 pill be paid in ry Given the following planned purchases for the next few months, determine the amount of cash that must be ava honth to pay for $118,600 m's purchases: $68,600 Planned Purchases Discounted at 2/10 Net 30 Planned Purchases without Discounts $50,000 Month uirement $70,000 sary wary $30,000 $70,000 $30,000 $70,000 $60.000 the beginning of the year incoins account payable bronce 530. AUGUSTO MORE January, Given the following planned purchases for the next few months, determine the amount of cash that must be ava $93,670 honth to pay the firm's purchases: $68,600 $100,000 Planned Purchases Discounted at 2/10 Net 30 Planned Purchases without Discounts $30,000 Month uirement $98,600 January February $70,000 $70,000 $30,000 March $70,000 $60,000 the firm's purchases: $98,600 $68,600 Planned Purchases without Discounts Month $130,000 uirement Planned Purchases Discounted at 2/10 Net 30 $70,000 $70,000 Ianuary February March $30,000 $93,670 $30,000 $60,000 $70,000