Problem 2 Cash Budget

Review Corp has the following information relating to their annual cash budget:

	Nov	Dec	Jan	Feb	March
Sales	100,000	100,000	120,000	150,000	160,000
Expenses	75,000	75,000	90,000	112,500	120,000
Taxes				25,000
Dividends					20,000

Collections

• 50% of sales are expected to be cash sales
• 20% of sales are expected to be credit sales and collected in the month after sale
• 30% of sales are expected to be credit sales and collected in the second month after sale

Payments

• 30% of selling and administrative expenses are expected to be paid in the month of the expense
• 70% of selling and administrative expenses are expected to be paid in the month after the expense

The cash balance on January 1 is $50,000

Required

Complete the following chart by calculating cash collections, cash payments and the ending cash balance for January, February and March.

	January	February	March
Begin Cash	50,000
Collections
Payments
Ending Cash