Question P4-8
Cash Disbursements Schedule: Maris Brothers, Inc. needs a cash disbursement schedule for the months of April, May, and June. Use the format of table 4.9 on page 133 and follow the information in its preparation.
Sales: February = $5000, 000; March = $500, 000; April = $560, 000; May = $610, 000; June = $650, 000; July = $6500, 000
Purchases: Purchases are calculated as 60% of the next month's sales, 10% of the purchases are made in cash, 50% of the purchases are paid for 1 month after purchase, and the remaining 40% of purchases are paid for 2 months after purchase.
Rent: The firm pays rent of $8,000 per month.
Wages and salaries: Base wages and salaries costs are fixed at $6,000 per month plus a variable cost of 7% of the current month's sales.
Taxes: A tax payment of $54,500 is due in June.
Fixed assets outlays: New equipment costing $75,000 will be bought and paid for in April.
Interest payments: An interest payment of $30,000 is due in June.
Cash dividends: Dividends of $12,000 will be paid in April.
Principal repayments and retirements: No principal repayments or retirements are due during these months.
Question P4-9
Cash budget: Grenoble Enterprises has sales of $50,000 in March and $60,000 in April. Forecast sales for May, June, and July are $70,000, $80,000, and $100,000 respectively. The firm has a cash flow balance of $5,000 on May 1 and wishes to maintain a minimum cash balance of $5,000. Given the following data, prepare and interpret a cash budget for the months of May, June, and July.
1) The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following the sale.
2) The firm receives other income of $2,000 per month.
3) The firm's actual or expected purchases, all made for cash, are $50,000, $70,000, and $80,000 for the months of May through July, respectively.
4) Rent is $4,000 per month.
5) Wages and salaries are 105 of the previous month's sales.
6) Cash dividends of $3,000 will be paid in June.
7) Payments of principal and interest of 4,000 is due in June.
8) A cash purchase of equipment costing$6,000 is scheduled in July.
9) Taxes of $6,000 are due in June.