SALES PER MONTH DURING THE LAST YEAR 20X1 JANUARY $ 550,000 FEBRUARY $ 825,000 MARCH $ 575,000 APRIL $ 870,000 MAY $ 1,080,000 JUNE $ 1,065,000 JULY $ 1,070,000 AUGUST $ 1,060,000 SEPTEMBER $ 1,180,000 OCTOBER $ 1,140,000 NOVEMBER $ 1,290,000 DECEMBER $ 1,460,000 I. Sales Projection: 20X2 After consulting the Company's Management Committee, it was agreed that business plans and strategies were deemed appropriate, a 35% increase in sales reported during the months of last year 20x1. All sales are estimated on credit. Projection of collections based on the monthly sales projection: 70% of the projected sales of each month, (January, February, March, etc.) are projected to be collected during the same month (January, February, March, etc.). o Due to a new collection policy, a two (2)% discount will be offered, if customers pay within ten days from the invoice date. It is projected that 3/4 parts of the clients will take advantage of this collection term. 15% of sales for each month are projected to be collected the month following the month of sale. For example: January sales charged in February, and so on. 10% of sales for each month are projected to be collected two months after the month of sale. For example: January sales collected in March. 5% of sales for each month are projected to be collected three months after the month of sale. o Due to the economic indicators and financial forecasts of the experts, it is advisable to consider that of this projected collection product, 2.75% is uncollectible. For example: January sales charged in April. Emergency situations policy. Due to considerations and learning from the hurricane phenomenon of Mara, the company officials have recommended that after determining and calculating the projections of collections for each month, appropriate (separate) 10% of the projected collections, as a fund to alleviate and attend to such emergencies. This policy implies that such funds are not to cover disbursements of the costs and operating expenses that are projected for the budget year. Projections of sales, collections and emergency situations are key to the formulation, structuring and calculations of the projections of the Sales Budget and Collections of Sales. II. Projection of Merchandise Purchases, necessary to fulfill the projected sales. 20X2 Sales projections affect purchases in the same way. These represent 55% of the projected monthly sales. They are purchased during the month of sale and are projected to pay within the same month with a two% cash discount. Projections of purchases are for the formulation, structuring and calculations of projections of the Purchase Budget III. Projection of monthly disbursements for operating expenses and principal of debts with their corresponding interests. 20X2 Expenses: all are paid from projected sales and in the month they are incurred. These are: Salaries: 27.50% of projected monthly sales Commissions 2% of monthly projected sales, plus 3.5% of monthly charges. Payroll: 10.9% of what was paid in wages and commissions. Profits: $ 45,000 monthly Insurance: $ 12,000 monthly Mortgage Interest: 6.5% simple interest, from the balance of the principal to be divided monthly, payable monthly. Interest Other debts: 12% simple interest on the principal balance to be divided monthly to apply to the others. Amortization of the principal of the debts: MORTGAGES $ 950,000 of total principal as of January. Monthly principal payments of $ 30,000. HINT: Simple interest calculation. The principal decreases monthly and the time in the formula will increase monthly one month at a time. OTHER DEBTS $ 750,000 Of total principal. Monthly principal payments of $ 25,000, at the end of the month. The principal decreases monthly and the time in the formula will increase monthly one month at a time. The information presented in this section is for the formulation, structuring and calculations of the Expense and Debt Budget projections. IV. Cash flow projection to shape and structure the Cash Budget. 20X2 The basis for making this budget are the results calculated in terms of collections and disbursements for purchases, expenses and debts of the previous budgets; plus the information below. Initial Cash Balance - Cash is $ 50,000 Minimum monthly cash balance in the budget period is $ 100,000. The shareholders are requesting dividends of $ 150,000 in the months of March, June, September, and December. o Such dividends will be awarded as long as the company does not have to borrow or finance