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Problem 15-10 Cash budgeting Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated

Problem 15-10 Cash budgeting

Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2014 and 2015:

May 2014 $186,000
June 186,000
July 372,000
August 540,000
September 720,000
October 360,000
November 360,000
December 90,000
January 2015 180,000

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

May 2014 $90,000
June 90,000
July 126,000
August 882,000
September 306,000
October 234,000
November 163,000
December 90,000

General and administrative salaries are approximately $28,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,800 a month. Income tax payments of $64,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.

Prepare a monthly cash budget for the last 6 months of 2014. If no entry required, leave the cell blank. Use minus sign to enter losses, loans outstanding or any other negative amounts.

May June July August September October November December January
Collections and purchases worksheet
Sales (gross) $ $ $ $ $ $ $ $ $
Collections
During month of sale $ $ $ $ $ $ $ $
During 1st month after sale $ $ $ $ $ $ $ $
During 2nd month after sale $ $ $ $ $ $ $ $
Total collections $ $ $ $ $ $
Purchases
Labor and raw materials $ $ $ $ $ $ $ $
Payments for labor and raw materials $ $ $ $ $ $ $
Cash gain or loss for month
Collections $ $ $ $ $ $
Payments for labor and raw materials $ $ $ $ $ $
General and administrative salaries $ $ $ $ $ $
Lease payments $ $ $ $ $ $
Miscellaneous expenses $ $ $ $ $ $
Income tax payments $ $ $ $ $ $
Design studio payment $ $ $ $ $ $
Total payments $ $ $ $ $ $
Net cash gain (loss) during month $ $ $ $ $ $
Loan requirement or cash surplus
Cash at start of month $ $ $ $ $ $
Cumulative cash $ $ $ $ $ $
Target cash balance $ $ $ $ $ $
Cumulative surplus cash or loans
outstanding to maintain $90,000 target cash balance $ $ $ $ $ $

Prepare monthly estimates of the required financing or excess funds - that is, the amount of money Bowers will need to borrow or will have available to invest. Round your answers to the nearest cent. Enter loans outstanding with minus sign.

July $
August $
September $
October $
November $
December $

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