Problem:
What will be the cash budget for this company: The company predicts that 5% of its credit sales will never be collected, 35% of its sales will be collected in the month of the sale, and the remaining 60% will be collected in the following month. Credit purchases will be paid in the month following the purchase. In March 2003, credit sales were $315,000.
Item April May June
Credit Sales $380,000 $340,000 $420,000
Credit Purchses $160,000 $190,000 $150,000
Cash disbursements
Wages, taxes, expenses $79,000 $75,000 $86,000
Interest $8,000 $8,000 $8,000
Equipment purchases $50,000 $70,000 $175,000
Item April May June
Beginning cash balance April =$230,000 May ? June ?
Cash disbursements April = $160,000
Ending Cash Balance April? May? June?