General Data

1. Sales are 25% cash, 75% credit

2. Of the credit sales 80% are collected in the month following the month of sale and 20% in the second month following the sale.

3. Gross profit margin on sales averages 25% i.e., the COGS is 75% of sales

4. All inventory purchases are paid during the month in which they are made.

5. The store follows the policy of purchasing enough inventory each month to cover the following months sales at cost.

6. A minimum cash balance of $5,000 is to be maintained by the store.

7. A $15,000 dividend payment will be made in January.

8. The cash balance as of July 31 is $10400

9. Sales budget August $1400 Sept $26000 October 22,000 Nov 38000 Dec 48000 Jan 18000 Feb 16000

10. Monthly expenses wages Aug 1400 Sept 1600 Oct 1600 Nov 1800 Dec 1800 Jan 1400

Other monthly expenses rent 400 depreciation 120 other 1% of sales (paid as incurred)

What is the cumulative borrowing in August?

What is the cumulative borrowing in September?

What is the cumulative borrowing in October?

Use this question to answer the net three question The following are the net cash inflows (outflows) from operations. How much will they be borrowing (cumulative at the end of each month? (The balances shown above are the receipts minus the purchases, you should now create a "cash budget" for August, September and October). August September October (10,140) Net Cash Flow (2,360) (7,520) Beg Cash EOM Cash B4 Borrow Borrow (Repay) EOM ash Cumm. Borrow