Solve The Problem

Projected Cash Receipts

Romaris Brothers Inc. needs a cash receipts schedule for the months of April, May, and June.

Actual Sales: February = $500,000, March = $500,000.

Forecast Sales: April =$560,000, May= $610,000, June= $650,000, July= $650,000

Assuming that sales are the only source of cash inflows and that 30% of them are for cash and the remainder are collected evenly over the following 2 months.

Prepare a schedule of projected cash receipts for April, May and June.

Projected Cash Disbursements

Romaris Brothers Inc. needs a cash disbursement schedule for the months of April, May, and June. The following information was collected from financial records:

Purchases: Purchases are calculated as 50% of the next months sales, 15% of purchases are made in cash, 60% of purchases are paid for 1 month after purchase, and the remaining 25% of purchases are paid for 2 months after purchase.

Rent: The firm pays rent of $9,000 per month.

Wages and salaries: Base wage and salary costs are fixed at $8,500 per month plus a variable cost of 5.5% of the current months sales.

Taxes: A tax payment of $45,600 is due in June.

Fixed asset outlays: New equipment costing $61,000 will be bought and paid for in May.

Principal payments: $35,000 due in June.

Interest payments: $3,000 due in June.

Cash dividends: $9,500 will be paid in April.

Prepare a schedule of projected cash disbursements for April, May and June.

Net Cash Flows

Prepare a schedule to compute de Net Cash Flows for April, May and June of Romaris Brothers Inc.

In the preparation of a quarterly cash budget, the following revenue and cost information have been compiled.

The firm collects 60 percent of sales for cash and 40 percent of its sales one month later.

Interest income of $50,000 on marketable securities will be received in December.

The firm pays cash for 40 percent of its purchases.

The firm pays for 60 percent of its purchases the following month.

Salaries and wages amount to 15 percent of the preceding month's sales.

Sales commissions amount to 2 percent of the preceding month's sales.

Lease payments of $100,000 must be made each month.

A principal and interest payment on an outstanding loan is due in December of $150,000.

The firm pays dividends of $50,000 at the end of the quarter.

Fixed assets costing $600,000 will be purchased in December.

Depreciation expense each month of $45,000.

The firm has a beginning cash balance in October of $100,000 and maintains a minimum cash balance of $200,000.

Prepare and evaluate a cash budget for the months of October, November, and December based on the information shown above.