MANAGERIAL ACCOUNTING CASH BUDGET LECTURE PROBLEM Fontanaco is in the wholesale rock business. The actual results for Fontanaco during the last 3 months are given below. OCT NOV DEC SALES $1,000,000 $1,500,000 $2,000,000 ACCTS. PAY 400,000 600,000 50,000 WAGES 200,000 300,000 150,000 RENT 75,000 75,000 75,000 UTILITI ES 30,000 35,000 0,000 FUEL EXP 20,000 25,000 30,000 MAINT. 10,000 15,000 15,000 DEPRE CIATIO 19,000 9.000 ,00 The budget for the next 3 months is as follows: JAN FEB MAR SALES $800,00 $1,000,000 $1,250,000 ACCTS. 300,000 400,000 $25,000 WAGES 175,000 200,000 25,000 RENT 75,000 75,000 75,000 UTILIT 40,000 35,000 30,000 ES FUEL EXP. 5,000 10,000 25,000 MAINT. 10.000 15,000 10,000 DEPRE CIATIO 9.000 9,500 9.500 N The credit department has developed a profile of how customers pay their bills based on the standard terms Fontanaco offers of net 30 days. 92% of all receivables are paid after 30 days. 95% of all receivables are paid after 60 days and 97% are paid after 90 days. Accounts payable are paid 30 days after they are received. All other expenses are paid in the month in which they are incurred During the month of Jan, Fontanaco plans to buy 50 new small delivery trucks at a cost of $20,000 per truck. The company plans to finance the trucks using a $1,500,000 line of credit it has established with their bank. The terms of the line of credit requires that Fontanaco pay off as much as it can on the line monthly. The annual interest rate is 10% payable monthly on the outstanding balance. The company wants to keep $75,000 in cash at the beginning of each month. At the end of Dec. $80,000 was in the cash account. Required: Develop a cash budget for Jan., Feb. and Mar. CASH ITEM JAN. FEB MAR