Question
The following is data from Star Company, which is a distributor of soap products: March 31 Cash $16.000.000 Accounts receivable $40.000.000 Inventory $72.000.000 Building and
The following is data from Star Company, which is a distributor of soap products:
March 31 | |
Cash | $16.000.000 |
Accounts receivable | $40.000.000 |
Inventory | $72.000.000 |
Building and equipment, net | $240.000.000 |
Accounts payable | $44.000.000 |
Capital stock | $300.000.000 |
Retained earnings | $24.000.000 |
Gross margin is 25% of sales. Actual and budgeted sales data:
|
90% cash receipts from sales and 10% credit. Repayment of credit sales will be received in the following month. The accounts receivable (March 31) is the result of credit sales in March.
Every month ending inventory 70% of the budgeted cost of goods sold in the following month. Inventory is purchased with 50% cash in that month while the remaining 50% will be paid in the following month. Accounts payable (March 31) is the result of purchasing an inventory in March.
Using previous data:
a. Create a schedule of expected cash collections for April, May, and June, and for the quarter in total.
b. Complete the following budget:
Merchandise Purchases Budget | |||
April | May | June | Quarter |
Budgeted cost of goods sold | |||
Ending inventory | |||
Total needs | |||
Beginning inventory | |||
Required purchases |
c. Make a schedule of expected cash disbursements - merchandise purchases for the months of April, May, and June and for the quarter in total.
d. Start-Up companies need to hire a financial professional. You are hired as a part time CFO. You must prepare a cash flow forecasting system. Give and explain your description of how to handle this task.
Note: The solution shows the correct and structured calculations and is supported by a comprehensive discussion
Thank you very much!
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