Question
Bombs Away Video Games Corporation has forecasted the following monthly sales: January $ 99,000 July $ 44,000 February 92,000 August 44,000 March 24,000 September 54,000
Bombs Away Video Games Corporation has forecasted the following monthly sales:
January $ 99,000 July $ 44,000
February 92,000 August 44,000
March 24,000 September 54,000
April 24,000 October 84,000
May 19,000 November 104,000
June 34,000 December 122,000
Total annual sales = $744,000
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, 20 percent are for cash and 80 percent are on account. All accounts receivable are collected in the month after the sale is made.
a. Prepare a monthly schedule of cash receipts. Sales in December before the planning year are $100,000
Cash receipt schedule
Jan Feb March Apr May June
Sales
Cash Receipts
Cash Sales
Prior Months Credit sales
Total Cash receipts
Cash receipt schedule
July Aug Sept Oct Nov Dec
Sales
Cash Receipts
Cash Sales
Prior Months Credit sales
Total Cash receipts
b). Prepare 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 $44,000 per month.
Cash receipt schedule
Jan Feb March Apr May June
Production Cost
Other Cash Payments
Total Cash Payments
Cash receipt schedule
Jan Feb March Apr May June
Production Cost
Other Cash Payments
Total Cash Payments
Total Cash receipts
c. Prepare a monthly cash budget for January through December using the cash receipts schedule from part b and the cash payments schedule from part c. The beginning cash balance is $5,000, which is also the minimum desired. (Negative amounts should be indicated by a minus sign.) c
Cash receipt schedule
Jan Feb March Apr May June
Beginning cash flow
Net cash flow
Cumulative cash balance
Monthly loan or repayment
Ending cash balance
Cumulative cash balance
Cash receipt schedule
July August Sept Oct Nov Dec
Beginning cash flow
Net cash flow
Cumulative cash balance
Monthly loan or repayment
Ending cash balance
Cumulative cash balance
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