winery

info :

line of credit : $25,000 which he used up within three months.

cash budget :

• only about 15% of all sales in any month were made through the tasting room and were cash sales.
• Of all the sales on credit, 5% were paid for in the same month the sale was made, 49% were paid for the next month, and 42% were paid for during the following month.
• Total sales for the winery for November : $158,780 and for December : $205,362.

cash needs :

• Andrew wanted to have $60,000 in the bank as a cash balance and he had more to start the year ($64,987).
• He had $129,378 in outstanding bills for December which needed to be paid in January as all purchases are paid for within thirty days.
• He wants to know what caused the cash problem last year as the income statement showed the firm had a nice 6.5% net profit.

Questions :

1. Do the cash flow forecast for the next six months
2. Does Andrewneed to reuse the line of credit that the bank has set up for him? if yes, how much? and if no suggest a reason why he may have run out of cash the previous year

Viggio Estimates for Next Year January February March April May June TOTAL Sales $73,305 $58,644 $58,644 $87,966 $97,740 $112,401 $488,700 Monthly Purchases $46,182 $36,946 $36,946 $55,419 $61,576 $70,813 $307,881 Mortgage payment $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $60,000 Rent for storage area $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $12,000 Utilities $2,000 $2,200 $1,800 $1,500 $2,000 $2,300 $11,800 Marketing $2,500 $2,100 $2,000 $2,200 $3,000 $2,500 $14,300 Insurance $700 $700 $700 $700 $700 $700 $4,200 Salaries and Benefits $5,000 $5,600 $5,000 $5,600 $6,400 $6,900 $34,500 Internet Website Maintenance $500 $500 $500 $500 $500 $500 $3,000 Repairs and Maintenance $500 $500 $500 $500 $500 $500 $3,000 Travel $1,800 $800 $1,500 $1,000 $800 $800 $6,700 Supplies $400 $400 $400 $400 $400 $400 $2,400 Loan Payments $2,275 $2,275 $2,275 $2,275 $2,275 $2,275 $13,650 Tax Payments $500 $560 $500 $560 $640 $690 $3,450 Annual Tax Payment $35,000 $35,000 Misc. $300 $300 $300 $300 $300 $300 $1,800