This assignment will require you to prepare the cash budget in excel, and determine the cashsurplus and shortage each month.The management estimates total sales for the period January through July based on actualsales from the immediate past quarter.

The following assumptions are made:Sales: Past and ExpectedOctober $300,000 January $150,000November $350,000 February $200,000December $400,000 March $200,000April $300,000May $250,000June $200,000July $300,000Historical Forecasta. Sales are 75% on credit basis and 25% on cash basis. 60% of credit sales arecollection one month after sale, 30% in the second month, and 10% in the thirdmonth. Bad debts are insignificant.b. Purchases are 80% of sales and are paid as follows: 50% of sales are paid in the samemonth and the remaining 50% are paid in the following month.c. Wages and salaries are as follows:January $30,000February $40,000March $50,000April $50,000May $40,000June $35,000d. Rent is $2,000 per monthe. Interest on $500,000 of 16% bonds is due on the calendar quarter. Hint: you need tocalculate the quarterly interest amount, and this interest will be paid each calendarquarter.f. A tax prepayment of $50,000 is due in April.g. A machinery worth $30,000 will be purchased in June.h. The company has a cash balance of $100,000 on January 1st, which is the minimumbalance maintained each month.1. Prepare cash budget for Jan to June.2. Determine the cash surplus and shortages for each month.

FIN 5130 Quiz 5 Extra Credit Instructor: Dr. Palkar Late assignments will not be accepted so please plan accordingly. You need to show your working notes for credit. You must submit your work using excel files (with .xls or .xlsx for credit). You must upload your files on Blackboard under the Assignment Dropbox for credit. This assignment will require you to prepare the cash budget and determine the cash surplus and shortage each month. The management estimates total sales for the period January through July based on actual sales from the immediate past quarter. The following assumptions are made: Sales: Past and Expected Historical Forecast October $300,000 January November $350,000 February December $400,000 March April May June July $150,000 $200,000 $200,000 $300,000 $250,000 $200,000 $300,000 a. Sales are 75% on credit basis and 25% on cash basis. 60% of credit sales are collection one month after sale, 30% in the second month, and 10% in the third month. Bad debts are insignificant. b. Purchases are 80% of sales and are paid as follows: 50% of sales are paid in the same month and the remaining 50% are paid in the following month. c. Wages and salaries are as follows: January February March April May June $30,000 $40,000 $50,000 $50,000 $40,000 $35,000 d. Rent is $2,000 per month e. Interest on $500,000 of 16% bonds is due on the calendar quarter. Hint: you need to calculate the quarterly interest amount, and this interest will be paid each calendar quarter. f. A tax prepayment of $50,000 is due in April. g. A machinery worth $30,000 will be purchased in June. h. The company has a cash balance of $100,000 on January 1st, which is the minimum balance maintained each month. 1. Prepare cash budget for Jan to June. 2. Determine the cash surplus and shortages for each month. Page 1 of 1