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Here are some important figures from the budget of Nechako Nougats Inc. for the first quarter of 2020: January February March Credit sales $400,500 $340,000

Here are some important figures from the budget of Nechako Nougats Inc. for the first quarter of 2020:

January

February

March

Credit sales

$400,500

$340,000

$520,500

Credit purchases

150,900

165,300

160,300

Cash disbursements

Wages, taxes, and expenses

40,040

65,000

60,100

Interest

12,580

10,580

13,000

Equipment purchases

75,800

115,000

15,000

The company predicts that 5% of its credit sales will never be collected, 45% of its sales will be collected in the month of the sale, and the remaining 50% will be collected in the following month. Credit purchases will be paid in the month following the purchase.

Cash in the beginning of the first quarter is $200,000.

In December 2019, credit sales were $250,000, and credit purchases were $160,000. Assume that the minimum cash balance for each month is $150,000.

  1. Using this information, prepare the cash budget.
  2. Compute the cash surplus (deficit) for each month.
  3. What would be your analysis based on this first-quarter budget?

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