Jay Jones (known as JJ) is planning his new business for a fifth of November opening to customers. The business is structured as a private company, which was registered by JJ for a cost of $600 in October. JJ is the only shareholder. He has set a target of $20,000 monthly operating profit for the company by the end of the first half year of operations. On last day of October, JJ will open the companys bank account with $5,000 plus the money needed to purchase company assets.

The company will sell camping fridges that are packaged together with a solar blanket and battery for $1,100 per pack. JJs market research suggests these will be popular with grey nomads, young adventurers and day-tripper families. Forecast sales in units (packs) per month as follows: 40 in November; 50 in December; 70 in January; 90 in February; and 100 per month thereafter. Collections from customers are expected to be 30% in the month of sale, 50% in the month following sale and 20% in the second month following sale.

JJs company will have two inventory suppliers, one for the fridges and one for the solar blankets and batteries. One-year contracts with both suppliers include cost per unit (fridges

$400 and solar blanket with battery $500) for one monthly order of 40 units or more, free order delivery within one week, and invoices issued upon order with 21-day payment terms. JJ intends to take the full 21 days credit and order in the third week of each month, starting in October. Order quantity will be based on the sales forecast for the upcoming month.

Forecast monthly operating expenses for the company, starting in the opening month, are

$3,500 for a salaried employee, $2,100 for utilities, $2,000 for insurance, and $1,500 for marketing. These will be paid in the month incurred. In addition, quarterly rent payments in advance of $7,500 will need to be paid, starting on the first day of the opening month.

Several assets will be purchased by the company on the first day of the opening month. Office furniture will cost $15,000 and storeroom fixtures and fittings will cost $18,000. Both have an expected 10-year useful life. Computer equipment will cost $9,000 and have a 3-year useful life. The company will pay for these assets at the time of purchase. The assets will be depreciated using the straight-line method but have no expected salvage value.

November-April monthly cash budget format based on preliminary forecasts (see scenarios below)