Cash Budget Problem Middletown Construction Inc.

1) The company is closed down for the months of January, February and December due to inclement weather. There are no administrative salaries, lease payments, miscellaneous costs, tax payments or new plant costs planned in those 3 months.

2) Sales are planned for March through November per the attached Excel sheet. Cash collections are as follows: 20% in the month of sale, 60% in the month following the sale, and 20% in the 2nd month after the sale.

3) Direct manufacturing costs are paid in the month after they happen, according to the Excel schedule attached.

4) Administrative salaries are $30,000, lease payments are $10,000 and miscellaneous cash payments are $5,000 per month when the business is open.

5) An income tax payment of $50,000 is scheduled for the months of June and September, and an expenditure of $23,000 is scheduled for June as well.

6) The company starts March with a $50,000 cash balance and requires that amount on hand at the end of each month. They borrow in $1,000 increments and make repayments in the same manner if extra cash above the minimum is on hand at the end of a month. Ignore interest costs for this problem.

Ignore the 3-page analysis requirement.

You are alsc age analysis of the results of your cash budget. Middletown Construction, Inc. has estimated the following sales forecast over the next 12 months (they close in the winter):January $0F ebrua $275,000 May $312,000 June $417,000 July $714,000 August $611,000 September $827,000 October $500,000 November $116,000 December $0 Th the following collection estimates regarding the forecast sales: - Payment collection within the month of sale =20% - Payment collection the month following sales =60% - Payment collection the second month following sales =20% PAID IN MONTH AFTER!!!! Payments for raw materials and labor costs are paid the month after the purchase and are estimated as follows:March $220,000Apri$240,0 7,000 July $350,000 August $415,000 September $242,000 October $214,000 November $222,000 Additional financial information is as follows: - Administrative salaries will approximately amount to $30,000 a month. - Lease payments are around $10,000 a month. - A one-time new plant investment for $23,000 is expected to incur and be paid in June. - Income tax payments estimated to be around $50.000 will be due in both June and September. - Miscellaneous costs are estimated to be around $5,000 a month. - Cash on hand on March 1 will be around $50,000, and a minimum cash balance of $50,000 shall be on hand at times. You are alsc age analysis of the results of your cash budget. Middletown Construction, Inc. has estimated the following sales forecast over the next 12 months (they close in the winter):January $0F ebrua $275,000 May $312,000 June $417,000 July $714,000 August $611,000 September $827,000 October $500,000 November $116,000 December $0 Th the following collection estimates regarding the forecast sales: - Payment collection within the month of sale =20% - Payment collection the month following sales =60% - Payment collection the second month following sales =20% PAID IN MONTH AFTER!!!! Payments for raw materials and labor costs are paid the month after the purchase and are estimated as follows:March $220,000Apri$240,0 7,000 July $350,000 August $415,000 September $242,000 October $214,000 November $222,000 Additional financial information is as follows: - Administrative salaries will approximately amount to $30,000 a month. - Lease payments are around $10,000 a month. - A one-time new plant investment for $23,000 is expected to incur and be paid in June. - Income tax payments estimated to be around $50.000 will be due in both June and September. - Miscellaneous costs are estimated to be around $5,000 a month. - Cash on hand on March 1 will be around $50,000, and a minimum cash balance of $50,000 shall be on hand at times