Precise Speed Inc., a laser printer manufacturer, has the following forecasted sales for 2018: January February March April May June July $200,000 $350,000 $400,000 $350,000 $250,000 $250,000 $300,000 Actual sales in November and December 2017 were $375,000 and 266,667, respectively. Sixty percent of sales are on credit. The firm collects 60% of these credit sales during the first after the sale and the remainder during the following second month. Purchases constitute 60% of the next month's sales. The company pays 50% during the first month after the purchase was made and the remainder in the next month. Wages, taxes and other expenses are expected to be 30% of forecasted sales. A major capital expenditure of $70,000 is expected in March. Interest payments are expected to be $30,000 every month and the company needs a minimum cash balance of $25,000. The beginning cash balance is $30,000. a) Using the Bithlo Barbecues' simple cash budget example from Chapter 4, help the financial staff of Precise Speed Inc., to prepare their cash budget for January to June 2018. 2 3 Precise Speed Inc. Cash Budget For the Period January to June 2018 December January February November March April May June July i Sales 5 Collections: Cash 3 First Month 3 Second Month 0 Total Collections 1 Purchases 2 Payment: 3 First Month 4 Second Month 5 Total Payments 6 7 Collections 8 Less Disbursements: 9 Inventory Payments 0 Wages, taxes and other exp. 1 Interest payments 2 Capital Spenditure 3 Total Disbursements Beginning Cash Balance 5 Collections - Disbursements 6 Unadjusted Cash Balance Current Borrowing 8 Ending Cash Balance Cumulative Borrowing 0 Notes: 1 Minimum Acceptable Cash Maximum Acceptable Cash Borrowing Rate (Annual) 4 Lending Rate (Annual) 5 6 7 Monthly Monthly