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Pharma Drug Store is a pharmacy in Portland, Maine, owned by Jane Smith, a local pharmacist. Pharma business has been good, but Ms. Smith finds
Pharma Drug Store is a pharmacy in Portland, Maine, owned by Jane Smith, a local pharmacist. | |||||||||
Pharma business has been good, but Ms. Smith finds that she frequently runs out of cash. To date, | |||||||||
she has dealt with this cash shortfall by delaying payment to the drug suppliers, which is | |||||||||
starting to cause problems. Instead of delaying payment, Ms. Smith has decided that she should | |||||||||
borrow from the bank to have cash ready when needed. To have an estimate of how much she must | |||||||||
borrow over the next three months, she must prepare a cash budget. | |||||||||
All of Pharma's sales are made on a cash basis, but drug purchases must be paid for during the | |||||||||
following month. Ms. Smith pays herself a salary of $4,800 per month, the rent on her store is | |||||||||
$2,000 per month, and a $12,000 payment for taxes is due in December. On December 1, there is | |||||||||
$400 cash on hand, but Ms. Smith wants to maintain a target cash balance of $6,000. Pharma's | |||||||||
estimated sales are $160,000 for December, $40,000 for January, and $60,000 for February. | |||||||||
Estimated drug purchases are $140,000 for November, $40,000 for December, $40,000 for | |||||||||
January, and $40,000 for February. | |||||||||
Prepare a cash budget for December, January, and February. | |||||||||
Please show/explain your work and calc. in excel or however you solved it. So I can understand, | |||||||||
ANSWER | |||||||||
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