Alpha-Tech, a rapidly growing distributor of electronic components, is formulating its plans for 20x5. Carol Jones, the firm's marketing director, has completed the following sales forecast. ALPHA-TECH 20x5 Forecasted Sales (in thousands) Month Sales January $ 7,500 February 8,500 March 7,500 April 10,000 May 11,000 June 12,500 July 13,500 August 13,500 September 14,500 October 14,500 November 13,500 December 15,500 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. The following information will be used in preparing the cash flow projection. Alpha-Tech's excellent record in accounts receivable collection is expected to continue. Sixty percent of billings are collected the month after the sale, and the remaining 40 percent two months after. The purchase of electronic components is Alpha-Tech's largest expenditure, and each month's cost of goods sold is estimated to be 30 percent of sales. Seventy percent of the parts are received by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale. Historically, 80 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 20 percent has been paid two months after receipt. Hourly wages and fringe benefits, estimated to be 30 percent of the current month's sales, are paid in the month incurred. General and administrative expenses are projected to be $16,220,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid uniformly throughout the year, except the property taxes, which are paid in four equal installments at the end of each quarter. 20x5 Forecasted General and Administrative Costs (in thousands) Salaries and fringe benefits $ 3,300 Promotion 4,400 Property taxes 1,330 Insurance 1,530 Utilities 1,600 Depreciation 4,060 Total $ 16,220 Income-tax payments are made at the beginning of each calendar quarter based on the income of the prior quarter. Alpha-Tech is $4,100,000. The company pays 100 percent of the estimated tax payment. Alpha-Tech maintains a minimum cash balance of $525,000. If the cash balance is less than $525,000 at the end of each month, the company borrows amounts necessary to maintain this balance. All amounts borrowed are repaid out of the subsequent positive cash flow. The projected April 1, 20x5, opening balance is $525,000. Alpha-Tech has no short-term debt as of April 1, 20x5. Alpha-Tech uses a calendar year for both financial reporting and tax purposes. Required: 1. Prepare a cash budget for Alpha-Tech by month for the second quarter of 205. For simplicity, ignore any interest expense associated with borrowing. (Negative amounts should be indicated by a minus sign.) X Answer is complete but not entirely correct. ALPHA-TECH Cash Budget For the Second Quarter of 20x5 April May 525 X $ 525 X $ June 1,869 X Beginning balance Collections: February sales 0 March sales April sales May sales Total receipts Total cash available Disbursements: Accounts payable 3,400 X 4,500 X 0 0 7,900 8,425 3,000 X 6,000 0 9,000 9,525 4,000 6,600 X 10,600 12,469 $ $ $ $ $ $ $ 2,688 X 275 X 903 3,123 X $ 275 X 3,534 X 275 X 903 > 903 X Wages General and administrative Property taxes Income taxes Total disbursements 0 $ $ $ $ $ Cash balance $ 1,640 5,506 2,919 331 X 0 3,250 333 0 5,045 7,424 0 0 7,424 4,301 5,224 0 331 X 5,555 Cash borrowed Cash repaid Ending balance $ $ Alpha-Tech, a rapidly growing distributor of electronic components, is formulating its plans for 20x5. Carol Jones, the firm's marketing director, has completed the following sales forecast. ALPHA-TECH 20x5 Forecasted Sales (in thousands) Month Sales January $ 7,500 February 8,500 March 7,500 April 10,000 May 11,000 June 12,500 July 13,500 August 13,500 September 14,500 October 14,500 November 13,500 December 15,500 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. The following information will be used in preparing the cash flow projection. Alpha-Tech's excellent record in accounts receivable collection is expected to continue. Sixty percent of billings are collected the month after the sale, and the remaining 40 percent two months after. The purchase of electronic components is Alpha-Tech's largest expenditure, and each month's cost of goods sold is estimated to be 30 percent of sales. Seventy percent of the parts are received by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale. Historically, 80 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 20 percent has been paid two months after receipt. Hourly wages and fringe benefits, estimated to be 30 percent of the current month's sales, are paid in the month incurred. General and administrative expenses are projected to be $16,220,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid uniformly throughout the year, except the property taxes, which are paid in four equal installments at the end of each quarter. 20x5 Forecasted General and Administrative Costs (in thousands) Salaries and fringe benefits $ 3,300 Promotion 4,400 Property taxes 1,330 Insurance 1,530 Utilities 1,600 Depreciation 4,060 Total $ 16,220 Income-tax payments are made at the beginning of each calendar quarter based on the income of the prior quarter. Alpha-Tech is $4,100,000. The company pays 100 percent of the estimated tax payment. Alpha-Tech maintains a minimum cash balance of $525,000. If the cash balance is less than $525,000 at the end of each month, the company borrows amounts necessary to maintain this balance. All amounts borrowed are repaid out of the subsequent positive cash flow. The projected April 1, 20x5, opening balance is $525,000. Alpha-Tech has no short-term debt as of April 1, 20x5. Alpha-Tech uses a calendar year for both financial reporting and tax purposes. Required: 1. Prepare a cash budget for Alpha-Tech by month for the second quarter of 205. For simplicity, ignore any interest expense associated with borrowing. (Negative amounts should be indicated by a minus sign.) X Answer is complete but not entirely correct. ALPHA-TECH Cash Budget For the Second Quarter of 20x5 April May 525 X $ 525 X $ June 1,869 X Beginning balance Collections: February sales 0 March sales April sales May sales Total receipts Total cash available Disbursements: Accounts payable 3,400 X 4,500 X 0 0 7,900 8,425 3,000 X 6,000 0 9,000 9,525 4,000 6,600 X 10,600 12,469 $ $ $ $ $ $ $ 2,688 X 275 X 903 3,123 X $ 275 X 3,534 X 275 X 903 > 903 X Wages General and administrative Property taxes Income taxes Total disbursements 0 $ $ $ $ $ Cash balance $ 1,640 5,506 2,919 331 X 0 3,250 333 0 5,045 7,424 0 0 7,424 4,301 5,224 0 331 X 5,555 Cash borrowed Cash repaid Ending balance $ $