Berrington specializes in automobiles accessories and receives all income from sales. The sales estimates are as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales In millions) SAR B20 SAR 850 SAR 930 SAR 1,010 Projected sales in the first quarter of the following year is SAR 1,500 (in million) Berrington Company has a beginning receivables of SAR345 million and the average collection period of 45 days. The company purchases from suppliers in a quarter are equal to 50 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 28 percent of sales, and interest and dividends are SARBO million per quarter. The capital expenditures are SAR250 million in quarter 2. The initial cash balance is SAR75 million, and the company's policy is to maintain a minimum balance of SARS0 million You are required to: *) Prepare the cash budget by completing the following schedules for Barrington Company b) Suggest how should Berrington manages its cash deficit. Note: You are required to show your workings for cash collections and cash disbursement for quarter 1. Cash collection schedule: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Beginning Receivables Sales Collections Ending receivables Cash disbursements schedule: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Payment of accounts Wages, taxes and other expenses Capital expenditures Interest and dividend payments Wisbursements Quarter 2 Quarter 3 Quarter 4 Cash disbursements schedule: Quarter 1 Payment of baccounts Wages, taxes band other expenses Capital expenditures Interest and dividend payments Total cash disbursements Quarter 3 Quarter 4 Net cash flow and cash balance: Quarter 1 Quarter 2 Total cash collections Total cash disbursements Net cash inflow Quarter 1 Quarter 2 Quarter 3 Quarter 4 Beginning Cash Balance Net cash inflow Ending cash balance Cumulative surplus (deficit) Berrington specializes in automobiles accessories and receives all income from sales. The sales estimates are as follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales (in millions) SAR 820 SAR 850 SAR 930 SAR 1,010 Projected sales in the first quarter of the following year is SAR 1,500 (in million) Berrington Company has a beginning receivables of SAR345 million and the average collection period of 45 days. The company purchases from suppliers in a quarter are equal to 50 percent of the next quarter's forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 28 percent of sales, and interest and dividends are SAR80 million per quarter. The capital expenditures are SAR250 million in quarter 2. The initial cash balance is SAR75 million, and the company's policy is to maintain a minimum balance of SAR50 million. You are required to: a) Prepare the cash budget by completing the following schedules for Barrington Company, b) Suggest how should Berrington manages its cash deficit
