Computerland

Computerland requires a minimum cash balance of $$100,000$ at the end March of the current

year in order to remodel their store. The cash balance at February ${28}^{th}$ is $$7,000.$

Any required borrowings take place in increments of $$1,000$ with interest of $1\mathrm{.}5\%$ per month.

Repayments of borrowed funds are also made in increments of $$1,000.$ Assume that

borrowings are made on the first day of the month in which the cash is required, and that

repayments are made on the last day of the month.

The following sales and collections information has been provided:

During March the store expects to collect $$200,000$ from sales made during January

and February.

The store expects monthly sales of $$120,000$ during March, April, and May.

Experience indicates that the store will collect $60\%$ of sales in the month of the sale,

$30\%$ in the month following the sale, and $7\%$ in the second month following the sale.

The remaining $3\%$ is uncollectible.

In February, the store sold some display cases for $$5,000$ and expects to collect this amount in

March.

Purchases in a given month average one$-$half $(50\%)$ of projected sales for that month with the

following payment schedule:

On average, $80\%$ of the accounts payable related to inventory purchases are paid for in

the month of purchase,

Remaining $20\%$ are paid in the following month.

The accounts payable outstanding from February inventory purchases is $$100,000$ at

the end of February.

Budgeted operating expenses for March include rent $(8\%$ of sales$),$ advertising $($$$5,000),$

employee compensation $($$$30,000),$ amortization $($$$2,000),$ and insurance $($$$1,000).$

Amortization and insurance expense is recorded as the related assets are used up$.$ Half the

advertising expense is paid as incurred, and the other half is accrued at the end of the month.

During March, Computerland will pay advertising of $$1,600$ that was accrued at February ${28}^{th}.$

Required:

Prepare a cash budget for Computerland for March of the current year as well as the supporting

schedules. You may wish to leverage the Excel template provided.