Cash Budget Assignment

It is January 31. Moser Industries is developing a cash budget for February, March, and April. Mosers sales in December and January were $100,000 and $200,000, respectively. Sales of $400,000, $300,000, and $200,000 have been forecasted for February, March, and April, respectively. Historically, 20% of the firms sales have been for cash, 50% have generated accounts receivable collected one month after the sale, and the remaining 30% have generated accounts receivable collected after 2 months. Bad-debt expenses have been negligible. In April, the firm will receive $40,000 in dividends from a subsidiary.

The firms purchases represent 70% of sales. The firm buys on credit and pays the full amount of the purchase the month following the purchase.

Rent is $5,000 each month. Fixed salary costs are $8,000 per month, and monthly wages are 10% of monthly sales. A tax payment of $25,000 is due in April. New machinery will be purchased for $130,000 and paid for in March. An interest payment of $10,000 is due in April. A cash dividend of $20,000 will be paid to stockholders in February. A $30,000 principal payment on debt is due in April.

The firms cash balance on January 31 is $50,000. Moser Industries is required to maintain a $25,000 minimum cash balance.

Prepare a Cash Budget (Cash Inflows, Cash Outflows, Summary) for the months of February, March, and April.