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Category > Management Posted 20 Jan 2018 My Price 9.00

Helen's Fashion Designs

Problem 15-10
Cash budgeting

Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2014 and 2015:

  May 2014 $186,000
  June 186,000
  July 372,000
  August 540,000
  September 720,000
  October 360,000
  November 360,000
  December 90,000
  January 2015 180,000

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

  May 2014 $90,000
  June 90,000
  July 126,000
  August 882,000
  September 306,000
  October 234,000
  November 163,000
  December 90,000

General and administrative salaries are approximately $28,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,800 a month. Income tax payments of $64,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.

Prepare a monthly cash budget for the last 6 months of 2014. If no entry required, leave the cell blank. Use minus sign to enter losses, loans outstanding or any other negative amounts.

  May   June   July   August   September   October   November   December   January
Collections and purchases worksheet                                  
Sales (gross) $     $     $     $     $     $     $     $     $  
Collections                                  
During month of sale $     $     $     $     $     $     $     $      
During 1st month after sale $     $     $     $     $     $     $     $      
During 2nd month after sale $     $     $     $     $     $     $     $      
Total collections         $     $     $     $     $     $      
Purchases                                  
Labor and raw materials $     $     $     $     $     $     $     $      
Payments for labor and raw materials     $     $     $     $     $     $     $      
                                   
Cash gain or loss for month                                  
Collections         $     $     $     $     $     $      
Payments for labor and raw materials         $     $     $     $     $     $      
General and administrative salaries         $     $     $     $     $     $      
Lease payments         $     $     $     $     $     $      
Miscellaneous expenses         $     $     $     $     $     $      
Income tax payments         $     $     $     $     $     $      
Design studio payment         $     $     $     $     $     $      
Total payments         $     $     $     $     $     $      
Net cash gain (loss) during month         $     $     $     $     $     $      
                                   
Loan requirement or cash surplus                                  
Cash at start of month         $     $     $     $     $     $      
Cumulative cash         $     $     $     $     $     $      
Target cash balance         $     $     $     $     $     $      
Cumulative surplus cash or loans                                  
    outstanding to maintain $90,000 target cash balance   $     $     $     $     $     $      


Prepare monthly estimates of the required financing or excess funds - that is, the amount of money Bowers will need to borrow or will have available to invest. Round your answers to the nearest cent. Enter loans outstanding with minus sign.

July $  
August $  
September $  
October $  
November $  
December $  

 

Answers

Maurice Tutor
(5)
Status NEW Posted 20 Jan 2018 08:01 PM My Price 9.00

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