QUESTION 1

1. Anglo Foods Inc., has the following forecasted sales for 2018:

   January	February	March	April	May	June	July
   $200,000	$350,000	$420,000	$350,000	$270,000	$200,000	$300,000

   Actual sales in November and December 2017 were $375,000 and 266,667, respectively. 60% of sales are on credit (i.e. 40% of sales will be received in cash in the same month). The firm collects 60% of these credit sales (i.e., 60%*60% = 36% of sales) during the first month after the sale and the remainder (i.e. 40% of credit sales and thus 40%*60% = 24% of sales) during the following second month.

   For example, for the January sales of $200,000, 40% (i.e. $80,000) will be received in cash in January, 36% (i.e. $72,000) will be received in cash in February, and the rest ($48,000) will be received in cash in March.

   Here are the information about the cash expenditures.

   1. Purchases constitute 60% of the next months sales. The company pays 50% during the first month after the purchase was made and the remainder in the next month.

   For example, January purchases will be 60% of February sales, i.e., $350,000*60%=$210,000. The company pays 50% of it ($105,000) in cash in February, and the rest in March.

   2. Wages, taxes and other expenses are expected to be 30% of forecasted sales.
   3. A major capital expenditure of $70,000 is expected in March.
   4. Interest payments are expected to be $30,000 every month.

   The company needs a minimum cash balance of $25,000. The beginning cash balance is $30,000.

   Using the Bithlo Barbecues simple cash budget example from Chapter 4, prepare their cash budget for January to June 2018.

   Answer Q (1-5) based on the cash budget you have prepared.

QUESTION 2

1. How much is the total cash expenditure (total disbursement) in January?

   		$230,00
   		$66,000
   		$266,000
   		$210,000

7 points

QUESTION 3

1. How much is the unadjusted cash balance for March?

   		$98,000
   		($73,000)
   		$42,000
   		$45,000

7 points

QUESTION 4

1. How much is the cash collection for January that is from sales one month earlier (December 2017)?

   		$90,000
   		$64,000
   		$72,000
   		$96,000

7 points

QUESTION 5

1. How much is the cumulative borrowing in March?

   		$90,000
   		$98,000
   		$88,000
   		$70,000