CHAPTER 4: THE CASH BUDGET 1. The 49'er Bar and Grill needs to prepare a cash budget for the first quarter of 2020. The financial staff at 49'er has forecasted the following sales figures: January $150,000 February $150,000 March April May $300,000 $250,000 $350,000 Actual sales in October, November, and December 2019 were $125,000, $156,000, and $175,000, respectively. Cash sales are 40% of the total, and the rest are on credit. Under the current credit policy the firm expects to collect 60% of credit sales the following month, 30% two months after, and the remainder in the third month after the sale. Each month, the firm makes inventory purchases equal to 45% of the of the next month's sales. The firm pays for 40% of its inventory purchases in the same month and 60% in the following month; nevertheless, the firm enjoys a 2% discount if it pays during the same month as the purchase. Estimated disbursements include monthly wages and other expenses representing 25% of the same month's sales; a major capital outlay of $30,000 expected in January; a dividend payment of $25,000 in February; $40,000 of long-term debt maturing in March; and a tax payment of $50,000 in April. The interest rate on its short-term borrowing is 7%. It has a required minimum cash balance of $20,000 every month, and has an ending cash balance of $30,000 for December 2019. a) Using the above information, create a cash budget for January to April 2020 b) . The cash budget should account for short-term borrowing and payback of outstanding loans. CHAPTER 4: THE CASH BUDGET 1. The 49'er Bar and Grill needs to prepare a cash budget for the first quarter of 2020. The financial staff at 49'er has forecasted the following sales figures: January $150,000 February $150,000 March April May $300,000 $250,000 $350,000 Actual sales in October, November, and December 2019 were $125,000, $156,000, and $175,000, respectively. Cash sales are 40% of the total, and the rest are on credit. Under the current credit policy the firm expects to collect 60% of credit sales the following month, 30% two months after, and the remainder in the third month after the sale. Each month, the firm makes inventory purchases equal to 45% of the of the next month's sales. The firm pays for 40% of its inventory purchases in the same month and 60% in the following month; nevertheless, the firm enjoys a 2% discount if it pays during the same month as the purchase. Estimated disbursements include monthly wages and other expenses representing 25% of the same month's sales; a major capital outlay of $30,000 expected in January; a dividend payment of $25,000 in February; $40,000 of long-term debt maturing in March; and a tax payment of $50,000 in April. The interest rate on its short-term borrowing is 7%. It has a required minimum cash balance of $20,000 every month, and has an ending cash balance of $30,000 for December 2019. a) Using the above information, create a cash budget for January to April 2020 b) . The cash budget should account for short-term borrowing and payback of outstanding loans