Q. 1

York Industries has planned for the following purchases in the next five months.

Month Budgeted Purchases

June $42,500

July $38,500

August $39,600

September $52,800

October $66,700

This is the established pattern for payment purchases: 15% in the month of purchase, 65% in the following month, and 20% two months after purchase.

York Industries also has the following planned sales over the next five months:

Month Budgeted Sales

June $88,500

July $98,500

August $99,300

September $82,800

October $1,06,800

20% of sales are cash and 80% of sales are credit. Cash sales are collected in the same month as sales and credit sales are collected with the following pattern; 35% in the month of sale, 50% in the month after the sale, and 15% two months after the sale. Operating expenses for each month are $13,000. Assume these expenses are paid for in cash at the end of each month. Required: What is the net cash flow for August and September?

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