Using EXCEL

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 June based on

actual sales from the immediate past six months. The following assumptions are made:

Historical Sales Forecasted Sales

July, 2016 $100,000January, 2017 $110,000

August, 2016 $125,000 February, 2017 $ 90,000

September, 2016 $105,000 March, 2017 $120,000

October, 2016 $155,000 April, 2017 $ 80,000

November, 2016 $ 60,000 May, 2017 $ 70,000

December, 2016 $ 70,000 June, 2017 $ 60,000

a. 50% of the Sales are collected immediately. 30% of the Sales will be collected one

month after the sale. 10% will be collected two months after the sale. 6% will be

collected three months after the sale. The remainder will be collected four months

after the sale. Bad debts are insignificant.

b. Purchases were $50,000 in July, 2016 and are expected to grow by 2% each month.

The purchases will be paid in the same month.

c. Wages and salaries of $30,000 will be paid each month.

d. Depreciation expenses are $20,000 each month.

e. Rent of $15,000 will be paid at the end of each calendar quarter.

f. Machinery worth $150,000 will be purchased in March.

Prepare the cash budget from January to June. Determine the cash surplus and

shortages for each month from January to June. Provide your analysis.