pha-Tech, a rapidly grawing distribubor of electronic components, is fornulating its plans for 20x5. Carol Jones, the firm's marketing director, has completed the following sales forecast ALPEA-TECH 510.000 13,300 15.000 Saptambar Octobar 17.000 17.000 18.000 Philip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projection. The following information will be used in preparing the cash flaw projection Alpha-Tech's excellent record in accounts receivable collection is expected to oontinue. Seventy percent of billings are colected the month after the sale, and the remaining 30 percent two manths after The purchase of electronic components is Alpha-Tech s largest expenditure, and each months costof goods scic, is estimated to be 40 percent af sales. Seventy percent of the parts are received by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale. Historically, 70 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 30 peroent has been paid bwo months after receipt Hourly wages and fringe benefits, estimated to be 30 percent of the current month's sales, are paid in the morth incurred. General and administrative expenses are projected to be $15,970,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid uniformly throughout the year, except the property axes, which are paid in four equal installments at the end af each quarter. in thousanda) Salarias and tringe banetita ALPHA-TECH Cash Budget For the Second Quarter of 20x 3, 600 3, 900 1.480 1.380 1, 600 Jane Total 15,90 February saies March sales Apli sales Income-tax payments are made at the beginning of each calendar quarter based on the income af the prior quarter. Alpha-Tech is subject to an income-tax rate af 40 percent. Alpha-Tech's operating otal receipts income for the first quarter of 20x5 is projected to be $3,800,000 tal cash avaiableS The company pays 100 percent of the estimated tax payment Apha-Tech maintains a minimum cash balance of $570,000. f the cash balance is less than $570,000 at the end af each month, the company borraws amounts necessary to maintain this balance. Nll amounts borrowed are repaid out of the subsequent positive cash flow. The projected Apri 1, 20x5, opening balance is $570,000. Alpha-Tech has no shorn-term debt as of April 1, 20x5 Alpha-Tech uses a calendar year for hoth financial reporting and tax Accounts payable Generali and administr ative Property tas Cash balance Cash bowed Cash repaid Ending balance 1. Prepare a cash budget for Alpha- Tech by month for the second quarter of 20xs. Forsimplicity, ignore any interest expense assoclated with horrowing (Negative amounts should be indicated by a manus sign)
