Cher Inc wants you to forecast their cash flows for Jan to March 2018.
Sales: Nov 2017 $150,000
Dec 2017 $100,000
January 2018 $120,000
Feb 2018 $90,000
March 2018 $215,000
April 2018 $150,000
Sales are 50% on credit and 1/2 are collected the month after the sale. 1/2 the second month after sale and 50% of the monthly sales are for cash and collected during the month of sale
COGS is 50% of the current month sales but paid for onemonth in advance
Fixed expenses: monthly rent is $20,000
monthly payroll is $15,000
sales tac due in JAN $1,500
beg cash is $20,000 which is the company required cash level. any amount borrwed in given month will pay interest at 1% per month the month following the month borrwed. excess cash will not earn interest
Prepare cash budget for the period from january to march 2018.