FIGURE 16-4 Cash Budget for Stars and Stripes Clothing A company-wide cash budget projects sales, collections, purchases, and expenses over a specified period to anticipate cash gains and losses. STARS AND STRIPES CLOTHING Cash Budget From January 1, 20xx to December 31, 20cx First Quarter ($ Second Quarter (9 Third Quarter (9 Fourth Quarter ($ Total (9 Cash sales and 150,000 160,000 150,000 185,000 645,000 collections Less payments 80,000 20,000 10,000 4,000 8,000 122,000 90,000 25,000 12,000 5,000 10,000 60,000 30,000 12,000 6,000 10,000 118,000 340,000 100,000 44,000 19,000 36,000 539,000 Purchases 110,000 25,000 Wages/salaries Rent 10,000 4,000 8,000 Other expenses Taxes Total payments 157,000 142,000 Cash gain or (loss) (7,000) 38,000 8,000 67,000 106,000

Question

If you were the financial manager of Stars and Stripes Clothing, what would you do with the excess cash that the firm expects in the second, third, and fourth quarters?

FIGURE 16-4 Cash Budget for Stars and Stripes Clothing
A company-wide cash budget projects sales, collections, purchases, and expenses over a specified period to anticipate cash gains and losses.
STARS AND STRIPES CLOTHING
Cash Budget
From January 1, 20xx to December 31, 20cx
First Quarter ($
Second Quarter (9
Third Quarter (9
Fourth Quarter ($
Total (9
Cash sales and
150,000
160,000
150,000
185,000
645,000
collections
Less payments
80,000
20,000
10,000
4,000
8,000
122,000
90,000
25,000
12,000
5,000
10,000
60,000
30,000
12,000
6,000
10,000
118,000
340,000
100,000
44,000
19,000
36,000
539,000
Purchases
110,000
25,000
Wages/salaries
Rent
10,000
4,000
8,000
Other expenses
Taxes
Total payments
157,000
142,000
Cash gain
or (loss)
(7,000)
38,000
8,000
67,000
106,000
Expand
Transcribed Image Text

FIGURE 16-4 Cash Budget for Stars and Stripes Clothing A company-wide cash budget projects sales, collections, purchases, and expenses over a specified period to anticipate cash gains and losses. STARS AND STRIPES CLOTHING Cash Budget From January 1, 20xx to December 31, 20cx First Quarter ($ Second Quarter (9 Third Quarter (9 Fourth Quarter ($ Total (9 Cash sales and 150,000 160,000 150,000 185,000 645,000 collections Less payments 80,000 20,000 10,000 4,000 8,000 122,000 90,000 25,000 12,000 5,000 10,000 60,000 30,000 12,000 6,000 10,000 118,000 340,000 100,000 44,000 19,000 36,000 539,000 Purchases 110,000 25,000 Wages/salaries Rent 10,000 4,000 8,000 Other expenses Taxes Total payments 157,000 142,000 Cash gain or (loss) (7,000) 38,000 8,000 67,000 106,000

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