Mathew T. Box, III, grandson of the founder and currently CEO of the M. T. Box Company, has been concerned about the firms short-term financial management. The treasurer of M. T. Box, Mary Hoover, has gather the following information and is asking you to create a cash budget, monthly pro forma income statements, and monthly pro forma balance sheets for the next six months for M. T. Box.

1. The payment pattern for revenues is estimated to be as follows: 20% of sales are for cash, 15% are paid for one month after the sale, 55% are paid for two months after the sale, 9% are paid for in three months, and 1% are uncollectible.

2. The cash account should be set to start each month in the amount of $15,000, plus 65% of next months salaries and wages, plus 75% of this months accounts payable. The cash account will be adjusted with the short-term investment (borrowing) account, and Mary Hoover believes M. T. Box can earn 9% PR on its short-term investments.

3. Purchase of raw materials each month are in the amount of 35% of the predicted sales for the month after next, plus 25% of next months predicted sales, plus 8% of this months sales . Purchases are paid for in the following month, and there are no discounts available from suppliers. The cost of raw materials averages 68% of sales.

4. The firm pays salaries and wages of $15,000 plus 14% of this months sales.

5. Fixed assets are being depreciated at the rate of 1% of net fixed assets per month.

6. The firm pays a cash dividend of $2,000 every month.

7. The long-term debt on the balance sheet carries a 15% APR, and payments are made quarterly in December, March, June, and September.

8. Taxes are at the rate of 35% of taxable income (including rebates for negative taxes). Taxes are paid monthly.

9. Mary Hoover expects the firm to purchase $150,000 of fixed assets at the end of April.

10. Sales for October, November, and December of this year were $60,000, $90,000, and $150,000, respectively. Sales forecasted for the next eight months are (in $1,000s)

Jan.	Feb.	Mar.		Apr.	May		Jun.	Jul.		Aug.
250	235	190		160	110		90	135		260
Balance Sheet as of December 31 (in $1,000s)
Assets						Liabilities and Owners Equity
Cash			$170			Accounts Payable			$160
Short-term Investments (borrowing)			90			Accrued Interest			0
Accounts Receivable			195			Long-term Debt			600
Inventory			157			Common Stock			120
Net Fixed Assets			615			Retained Earnings			347
Total Assets			$1,227			Liabilities and Stockholders Equity			$1,227