Prepare a cash flow forecast for the following start-up company. (No Sales were generated before October 2016)
2016: October sales = $ 8,000
2016: November sales = $10,000
2016: December sales = $10,000
2017: January sales = $10,000, then rise $1,000/month for 2 months, then rise $3,000/month for 3 months.
Sales on account take 2 months' to be paid back. 50% of all sales are on account.
Cost of sales (materials) = 40% of sales in the month, purchases for each month's sales are made one month in advance and paid in cash.
Insurance expense is $3,000/quarter - payable in December 2016, March 2017 and June 2017
Wage expenses are $3,000/month beginning in October 2016
Machine was bought in February 2017 for $5,000
Cash 1/1/2016 = $8,500
Calculate the cash flow forecast as of June 2017. A cash flow forecasting template is attached for your convenience.