Question #3.

The Lissome Corporation is a merchandising company. You are going to prepare a short-term cash forecast for July. Selected financial data from Lissome for July, 2016 are reproduced below:

Cash on hand, July 1, 2016 $ 4,000

A/R, July 1, 2016 4,000

Forecasted sales for July 30,000

Forecasted A/R, July 31, 2016 4,200

Inventory, July 1, 2016 5,000

Desired inventory, July 31, 2016 3,000

Depreciation expense 800

Miscellaneous outlays 2,200

Minimum cash balance desired 6,000

A/P, July 1, 2016 3,600

Additional information:

1. Gross profit equals 20% of cost of goods sold.
2. Lissome purchases all inventory on the first day of the month and receives it the following week.
3. Lissome pays 75% of payables within the month of purchase and the balance in the following month.
4. All remaining expenses are paid in cash

Required:

1. Calculate purchases for the month of July
2. Now prepare the forecast using the format below;

Beginning cash balance $4,000

Cash collections .

Total cash available .

Cash disbursements For:

Purchases ..

Miscellaneous outlays ..

Total cash disbursements .

Cash balance .

Minimum cash balance desired $6,000

Excess (Deficit) cash