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Budgeting Ahead On Jan 1, 2021, GrubHeven is attempting to budget cash flows through Mar 31, 2021. On this latter date, an unsecured note will

Budgeting Ahead

On Jan 1, 2021, GrubHeven is attempting to budget cash flows through Mar 31, 2021. On this latter date, an unsecured note will be payable in the amount of $4 million, at 3% per annum. This amount was borrowed on Sep 30, 2020 to carry the company through the seasonal peak in Oct through Dec 2020. Cash Interest payment are settled monthly.

The company only transact on credit sales. A discount of 5% is given to all customers who pay within one month. 30% of the accounts receivable will be received in the month of sale. 50% will be collected in the following month, and 20% will be received 2 months after sale. There is a 5% provision for bad debt for accounts receivable owing 2 months after sale.

Projected and Actual Sales are:

image text in transcribed
Projected Sales ($) Actual Sales ($) October 4 900 000 October 5 500 000 November 5 000 000 November 5 600 000 December 5 000 000 December 5 800 000 January 4 900 000 January February 5 400 000 February March 5 500 000 March April 5 100 000 April

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