Prepare a monthly cash budget for january february and

Question

Problem-

The board of directors of Gladiator Robotics is considering whether or not to donate to a national robotics convention for high school students interested in technology and engineering. The company needs you to prepare a monthly cash budget to determine the available cash reserves for January, February, and March. Relevant data appear below.

	October actual	November actual	December actual	January	February	March
Sales	$300,000	$325,000	$450,000	$310,000	$350,000	$400,000

All sales are on account. Collections are expected to be 60% in the month following the sale, 25% in the second month following the sale, and 10% in the third month following the sale. Five percent are deemed to be uncollectible. The company sold equipment in February for $20,000 and received a dividend on investments of $4,000 in March. Cash on hand as of January 1^st is $14,000.

Material purchases are as follows:

October	November	December	January	February	March
$80,000	$85,000	$105,000	$80,000	$88,000	$92,000

Material purchases are paid 50% in the month purchased and the remainder in the following month.

Other disbursements are paid in the month incurred.

	January	February	March
Labor and wages	150,000	185,000	215,000
Selling costs	62,000	68,000	78,000
G & A costs	30,000	31,000	38,000
Income taxes			32,000
Capital equipment	50,000

The company wants to maintain a cash balance at the end of each month of at least $10,000. It has a $250,000 line of credit at the bank and will borrow from the bank in order to maintain this balance.

Part I: Prepare a monthly cash budget for January, February, and March.

Part II: Analyze the cash budget and make recommendations to the board of directors of Gladiator Robotics regarding your findings. Be specific regarding possible causes and remedies

Part III: What if any concerns do you have about the ability to make the donation? Also, do you have any concerns about cash on hand which might impact variable HR expenses such as recruitment costs or other commitments to employees including staffing, development or rewards? Be specific.

Additional information-

This problem relates to Basic Accounting and it preparing a cash budget for an organization and making recommendations based on the review of the cash budget.