Question
In-tech Corporation's sales and purchases for the last three months are as following: Sales ($) Purchases ($) October 100,000 80,000 November 90,000 100,000 December 120,000
In-tech Corporation's sales and purchases for the last three
months are as following:
Sales ($)
Purchases ($)
October
100,000
80,000
November
90,000
100,000
December
120,000
75,000
For the next three months, it estimates sales and purchases
to be as following:
Sales ($)
Purchases ($)
January
90,000
70,000
February
80,000
70,000
March
80,000
70,000
It pays 40 percent of purchases in cash and gets a 4
percent discount.Another 40 percent of purchases are paid
the next month, and the final 20 percent of purchases are
paid in the second month after the purchase (for example,
40 percent of October purchases are paid in October, 40
percent October purchases are paid in November, and 20
percent October purchases are paid in December).Half of
the sales are made in cash, and the balance is collected
the next month.Cash sales are given a two percent
discount, and five percent of credit sales end up as bad
debt.The monthly operating expenses for In-tech
Corporation's are $10,000.In-tech expects to sell one of
its machinery in March for $25,000.It will buy the
replacement in April for $50,000.The cash balance as on
December 31 was $50,000.In-tech has a target cash balance
of $50,000.
Prapare a monthly cash budget for the next
three months.'
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