Alpha-Tech, a rapidly growing distributor of electronic components, is formulating its plans for 20x5. Carol Jones, the firm’s marketing director, has completed the following sales forecast.

ALPHA-TECH
20x5 Forecasted Sales
(in thousands)
Month		Sales
January		$	9,500
February			10,500
March			9,500
April			12,000
May			13,000
June			14,500
July			15,500
August			15,500
September			16,500
October			16,500
November			15,500
December			17,500

Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. The following information will be used in preparing the cash flow projection.

Alpha-Tech’s excellent record in accounts receivable collection is expected to continue. Seventy percent of billings are collected the month after the sale, and the remaining 30 percent two months after.

The purchase of electronic components is Alpha-Tech’s largest expenditure, and each month’s cost of goods sold is estimated to be 35 percent of sales. Seventy percent of the parts are received by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale.

Historically, 70 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 30 percent has been paid two months after receipt.

Hourly wages and fringe benefits, estimated to be 30 percent of the current month’s sales, are paid in the month incurred.

General and administrative expenses are projected to be $16,470,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid uniformly throughout the year, except the property taxes, which are paid in four equal installments at the end of each quarter.

20x5 Forecasted General and Administrative Costs
(in thousands)
Salaries and fringe benefits	$	3,000
Promotion		4,200
Property taxes		1,540
Insurance		1,920
Utilities		1,500
Depreciation		4,310
Total	$	16,470

Income-tax payments are made at the beginning of each calendar quarter based on the income of the prior quarter. Alpha-Tech is subject to an income-tax rate of 40 percent. Alpha-Tech’s operating income for the first quarter of 20x5 is projected to be $4,600,000. The company pays 100 percent of the estimated tax payment.

Alpha-Tech maintains a minimum cash balance of $575,000. If the cash balance is less than $575,000 at the end of each month, the company borrows amounts necessary to maintain this balance. All amounts borrowed are repaid out of the subsequent positive cash flow. The projected April 1, 20x5, opening balance is $575,000.

Alpha-Tech has no short-term debt as of April 1, 20x5.

Alpha-Tech uses a calendar year for both financial reporting and tax purposes.

Required:

Prepare a cash budget for Alpha-Tech by month for the second quarter of 20x5. For simplicity, ignore any interest expense associated with borrowing. (Negative amounts should be indicated by a minus sign.)

April. May June.

Beginning balance

Collections:

February sales

March sales

April sales

May sales

Total receipts

Total cash available

Disbursements:

Accounts payable

Wages

General and Administrative

Property taxes

Income taxes

Total disbursements

Cash balance

Cash borrowed

Cash repaid

Ending balance