This practice exercise explores simple cash budgets. Create a spreadsheet file that contains a simple monthly cash budget for the next year for the business described in the following scenario:

Assume you are thinking about starting a business and would like to forecast your cash needs for the next six months. You expect sales to be approximately $30,000 per month for the first 12 months and your purchases to support sales will be approximately 60% of sales. You anticipate about 20% of your sales will be cash and 80% collected the following month. Your supplier has agreed to extend credit for 70 days at no cost (i.e. you will pay your bills on a two month lag). Your monthly expenses for rent, wages, utilities, and so forth will be approximately $3,500 per month. Identify which of these are fixed costs and which ones are variable costs. You have deposited $15,000 in a checking account to begin your operations and would like to maintain a minimum balance of $5,000 in that account.

After building the cash budget, use it to address the following:

Explain the purpose of creating budgets and how your budget will help the business remain capitalized

Will you need additional funds at some point? Justify your answer.

How would you raise capital in the future?

Using the cash budget and answers to the above questions, create a 3-page APA-formatted paper explaining how to use the cash budget to finance the business illustrated in the scenario. Make sure to include the cash budget in an appendix.