Which of the following statements are true with regard to a cash budget? Check all that apply. An advantage of the cash budget over other financial forecasting tools is its ability to reflect the precise timing and magnitudes of a firm's expected cash inflows and outflows. A cash budget is a forecasted statement that shows how a company's cash will be obtained and how it will be spent. Annual budgeting information usually provides sufficient information to manage most companies, U A cash budget provides information about a company's ability to repay its loans or meet its other obligations. Assume that Morgan Co. has the following accounts receivable pattern: 80% Month of sale Month following the sale 20% All sales are on credit. If sales in April and May are budgeted to be $300,000 and $400,000, respectively, the cash expected to be collected in May is $ Morgan Co. purchases raw materials on account. Some of Morgan's suppliers do not offer discounts and require payment the month following the purchase. Other suppliers sell on credit terms of 2/10 net 30, which means that Morgan can take a 2% discount and pay 98% of the invoiced amount if the invoice is paid within 10 days. If the invoice is not paid within 30 days of making the purchase, then Morgan must pay the full amount (100%) of the invoice. Morgan's policy is to take advantage of available cash discounts by paying on day 10 and to make payments to suppliers who do not offer discounts on day 30. Month of sale Month following the sale 80% 20% All sales are on credit. If sales in April and May are budgeted to be $300,000 and $400,000, respectively, the cash expected to be collected in May is $ Tips Tips Morgan Co. purchases raw materials on account. Some of Morgan's suppliers do not offer discounts and require payment the month following the purchase. Other suppliers sell on credit terms of 2/10 net 30, which means that Morgan can take a 2% discount and pay 98% of the invoiced amount if the invoice is paid within 10 days. If the invoice is not paid within 30 days of making the purchase, then Morgan must pay the full amount (100%) of the invoice. Morgan's policy is to take advantage of available cash discounts by paying on day 10 and to make payments to suppliers who do not offer discounts on day 30 At the beginning of the year, Morgan's account payable balance is $60,000. All available discounts have been taken, and the balance will be paid in January. Given the following planned purchases for the next few months, determine the amount of cash that must be available each month to pay for the firm's purchases: Self- e quiz Monthly Cash Requirement January Planned Purchases Discounted at 2/10 Net 30 40,000 70,000 70,000 Planned Purchases without Discounts 30,000 60,000 February March 30,000 Grade It Now Save & Continue Continue without saving