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Using the template below, prepare a monthly cash budget for the last 5 months of 2014 for Helen's Fashion Designs. Only complete part a. as
Using the template below, prepare a monthly cash budget for the last 5 months of 2014 for Helen's Fashion Designs. Only complete part a. as indicated below. | |||||||||||
Input Data | |||||||||||
Collections during month of sale | 10% | ||||||||||
Collections during month after sale | 75% | ||||||||||
Collections during second month after sale | 15% | ||||||||||
Lease payments (monthly) | $9,000 | ||||||||||
General and administrative salaries (monthly) | $27,000 | ||||||||||
Depreciation charges (monthly) | $36,000 | ||||||||||
Income tax payments (due in Sep & Dec) | $63,000 | ||||||||||
Miscellaneous expenses (monthly) | $2,700 | ||||||||||
New design studio payment (due in Oct) | $180,000 | ||||||||||
Cash on hand July 1 | $132,000 | ||||||||||
Minimum cash balance | $90,000 | ||||||||||
Sales adjustment factor | 0% | ||||||||||
Sales | $180,000 | $180,000 | $360,000 | $540,000 | $720,000 | $360,000 | $360,000 | $90,000 | $180,000 | ||
Labor & raw material cost incurred (payment made one month later) | $90,000 | $90,000 | $126,000 | $882,000 | $306,000 | $234,000 | $162,000 | $90,000 | |||
a. Prepare a monthly cash budget for the last 6 months of 2014. | |||||||||||
The Cash Budget | |||||||||||
May | June | July | August | September | October | November | December | January | |||
Sales (gross) | $180,000 | $180,000 | $360,000 | $180,000 | |||||||
(1) Collections | |||||||||||
During month of sale | 36,000 | ||||||||||
During 1st month after sale | 135,000 | ||||||||||
During 2nd month after sale | 27,000 | ||||||||||
Total collections | $198,000 | ||||||||||
(2) Purchases and payments for labor and raw materials | |||||||||||
Purchase of labor and raw materials | $90,000 | $90,000 | $126,000 | ||||||||
Payments for labor and raw materials | $90,000 | ||||||||||
(3) Cash gain or loss for month | |||||||||||
Total collections | $198,000 | ||||||||||
Payments for labor and raw materials | 90,000 | ||||||||||
General and administrative salaries | 27,000 | ||||||||||
Lease payments | 9,000 | ||||||||||
Miscellaneous expenses | 2,700 | ||||||||||
Income tax payments | |||||||||||
Design studio payment | |||||||||||
Total payments | $128,700 | ||||||||||
Net cash gain (loss) during month: Total collections - Total payments | $69,300 | ||||||||||
(4) Cash surplus or loan requirement | |||||||||||
Check figures for cash from operations at start of month. | $201,300 | $387,600 | ($65,100) | $67,200 | $208,500 | ||||||
Cash from operations at start of month | $132,000 | ||||||||||
Cumulative cash (Row 50 plus Row 55) | $201,300 | ||||||||||
Target cash balance | $90,000 | ||||||||||
Cumulative surplus cash or loans | |||||||||||
outstanding to maintain $90,000 target cash balance | $111,300 | ||||||||||
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