K L Arrow Games Company's actual sales for April and May and forecasted sales for June through September are shown below. M 4 6 8 ON 9 April May June July August September October November 10 11 12 13 14 15 $320,000 $300,000 $275,000 $275,000 $290,000 $330,000 $470,000 $400,000 16 17 18 19 The company's collection pattern is that (after allowing for 1% uncollectible accounts), 10% of its sales art cash, 20% are collected in the month after the sale and the remainder are collected in 60 days The company buys input materials according to 43% of expected sales two months ahead, It pays for its purchases 40% in the month of purchase and 60% in the month after tabor expense equals 1 of the coming month's sales, Overhead expense equals $12,000 per month. Long term interest payments of $30,000tre due in June and September. A cash dividend of $50,000 is scheduled to be paid in June. Tax payments of $25,000 are due in June and September. There is a scheduled capital outlay of $300,000 in July, The company had an ending cash balance in May of $20,000. The minimum desired cash balance is $10,000 Any short term borrowing will be at an annual rate of 9% (Hint: divide it by 12 to get monthly rate, which you will need for calculating interest), 20 ANANAS 23 24 25 26 27 28 Construct a cash budget for June to September 30 days Ail June July August September October November 7 Sales ce 300,000 225.000 275.000 290.000 330, 000 470.000 400.000 8 Collectable cales EER 292.000 272,250 272.250 287 1005 326, 2008 465 300 396,00 9 Purchases $113,2501S 120 200 $ 141.900S 202 100122.000 10 11 12 Cash Budget June July August September 1) Cash Innowe 14 Collected la cash $ 272515 272255 20, 210 15 32.620 5 59,400 s 54,450 $ 544505 10 57/420 60 days 21.260 15 2070005 1907 190575 short-term rate 17 uncollectible 18 Total Cash In flows 19 AR in month ARI 30 20 Cash Outflows 21 Purchase payments AR in 60 120,00 15.02 165.00 22 90.000 abor Labor S 22/05 29,00015 31,000S 23 42.000 Overhead 5 12.000 12.000 12.000 24 17.000 Long term interest pays Beg Balune 5 30,000 25 Dividends 20.000 minimum bal 5 SO,000 26 purchases Tax payment 25.000 5 27 25,000 paid Capital out 28 Interest of short-term borrowing 29 Total Cash Out How Overhead 20122.50 210.990 304,060 Dividend 11 Financing tax pts cap ex Beginning Balance 20,000 Interest Balance before financing Borrowing needed 35 Repayment 36 Cumulative borrowie 37 * 30 Balance after financing Information 99 1.00% 10N 204 201 10% of coming mth $ 20,000 $ 10,000 O two month forward 40% month of 60% month after $12.000 per month $ 50,000 e $ 25,000 ju, sept $300,000 July 10.000 83 41