Question
LT Graphics has forecast its sales revenues and purchases for the first six months of 2023 as follows: January February March April May June
LT Graphics has forecast its sales revenues and purchases for the first six months of 2023 as follows: January February March April May June Sales $ 50,000 55,000 40,000 45,000 55.000. 65,000 Purchases $ 40,000 35,000 25.000 20,000 30,000 40,000 60% of sales are on credit. On the basis of past experience, 50% of the account receivables are collected in the month after sale, and the remainder is collected two months after the sale. Purchases are paid two months after they are incurred. Other monthly expenses amount to $30,000 including depreciation expense of $4,000. Additionally, the Board of Directors has approved total dividends of $6,000 to be paid in June. The firm expects to have a cash balance of $5,000 on hand as of April 1, and is required to maintain this as its minimum cash balance. Required: (14 marks) a. Prepare a schedule of cash receipts for April, May and June. (5 marks) b. Prepare a cash budget for the same period. (9 marks)
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