Bombs Away Video Games Corporation has forecasted the following monthly sales:

January

$

118,000

July

$

63,000

February

111,000

August

63,000

March

43,000

September

73,000

April

43,000

October

103,000

May

38,000

November

123,000

June

53,000

December

141,000

Total annual sales = $972,000

Bombs Away Video Games sells the popular Strafe and Capture video game. It sells for $5 per unit and costs $2 per unit to produce. A level production policy is followed. Each month's production is equal to annual sales (in units) divided by 12.

Of each month's sales, 30 percent are for cash and 70 percent are on account. All accounts receivable are collected in the month after the sale is made.

a.

Make a monthly production and inventory schedule in units. Beginning inventory in January is 40,000 units.

Bombs Away Video Games Corporation

Production and inventory schedule in units

Beginning

inventory

+

Production

-

Sales

=

Ending

inventory

January

40,000

February

March

April

May

June

July

August

September

October

November

December

b.

create a monthly schedule of cash receipts. Sales in December before the planning year are $100,000.

Bombs Away Video Games Corporation

Cash Receipts Schedule

January

February

March

April

May

June

Sales

$

$

$

$

$

$

Cash receipts:

Cash sales

$

$

$

$

$

$

Prior month's credit sales

Total cash receipts

$

$

$

$

$

$

Bombs Away Video Games Corporation

Cash Receipts Schedule

July

August

September

October

November

December

Sales

$

$

$

$

$

$

Cash receipts:

Cash sales

$

$

$

$

$

$

Prior month's credit sales

Total cash receipts

$

$

$

$

$

$

c.

create a cash payments schedule for January through December. The production costs of $2 per unit are paid for in the month in which they occur. Other cash payments, besides those for production costs, are $60,000 per month.

Bombs Away Video Games Corporation

Cash Payments Schedule

Constant production

January

February

March

April

May

June

Production cost

$

$

$

$

$

$

Other cash payments

Total cash payments

$

$

$

$

$

$

Bombs Away Video Games Corporation

Cash Payments Schedule

Constant production

July

August

September

October

November

December

Production cost

$

$

$

$

$

$

Other cash payments

Total cash payments

$

$

$

$

$

$

d.

create a monthly cash budget for January through December using the cash receipts schedule from partband the cash payments schedule from partc. The beginning cash balance is $5,000, which is also the minimum desired.(Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.)

Bombs Away Video Games Corporation

Cash Budget

January

February

March

April

May

June

Beginning cash

$

$

$

$

$

$

Net cash flow

Cumulative cash balance

$

$

$

$

$

$

Monthly loan or (repayment)

Ending cash balance

$

$

$

$

$

$

Cumulative loan balance

$

$

$

$

$

$

Bombs Away Video Games Corporation

Cash Budget

July

August

September

October

November

December

Beginning cash

$

$

$

$

$

$

Net cash flow

Cumulative cash balance

$

$

$

$

$

$

Monthly loan or (repayment)

Ending cash balance

$

$

$

$

$

$

Cumulative loan balance

$

$

$

$

$

$