Chapter 16 Assignment

Input Data

Collections during month of sale 20%

Collections during month after sale 50%

Collections during second month after sale 30%

Lease Payments $12,000

Target Cash Balance $125,000

General and Admin. Salaries $35,000

Depreciation Charges $30,000

Income Tax Payments (March & June) $74,000

Miscellaneous expenses $5000

New van for deliveries (May) $35,000

Cash on hand March 1^st $100,000

Mark Smith, owner of MS Inc. is planning to request a line of credit from his bank. She has prepared the following sales forecasts for 2013.

Sales Labor and Raw Materials

January 220,000 110,000

February 220,000 110,000

March 400,000 200,000

April 600,000 500,000

May 800,000 420,000

June 400,000 200,000

July 400,000 200,000

August 150,000 250,000

September 300,000 N/A

Prepare a monthly cash budget for March thru August.

Jan. Feb. Mar. Apr. May June Jul. Aug. Sept.

Sales (gross)

Collections

During month of sale

1^st month after sale

2^nd month after sale

Total collections

Purchases

Labor and raw materials

Payment for Labor

And raw materials

G&A salaries

Lease payments

Misc. expenses

Income Tax exp.

Van

Total Payments

Net Cash Flows

Cash on hand at start of forecast period

Net Cash Flow (NCF)

Cumulative NCF

Cash Surplus (or Loan)

Target cash balance

Surplus or loan needed

Payments for labor and raw materials are paid in the following month.

Comment