Graham Potato Company has projected sales of $13,200 in September, $19,000 in October, $26,500 in November, and $20,400 in December. Of the company's sales, 25 percent are paid for by cash and 75 percent are sold on credit. Experience shows that 40 percent of accounts receivable are paid in the month after the sale, while the remaining 60 percent are paid two months after. Determine collections for November and December.

 

Also assume Graham's cash payments for November and December are $10,500 and $13,000, respectively. The beginning cash balance in November is $5,000, which is the desired minimum balance.

 

1A.

Prepare cash receipts schedule

Graham Potato Company Cash Receipts Schedule

	September	October	November	December
Sales	$	$	$	$
Credit Sales	$	$	$	$
Cash Sales			$	$
One month after sale			$	$
Two month after sale			$	$
Total Cash Reciepts			$	$

1B:

Prepare cash budget with borrowing needed or repayments for November and December.

Note: Negative amounts should be indicated by a minus sign. Assume the November beginning loan balance is $0. Leave no cells blank be certain to enter 0 wherever required.

Graham Potato Company Cash Budget

	November	Decembe
Total Cash reciept	$	$
Total cash payments	$	$
Net Cash flow	$	$
Beginning Cash balance	$	$
Cumulative cash balance	$	$
Monthly borrowing (repayment)	$	$
Ending cash balance	$	$
Cumulative loan balance	$	$