Problem 24-01 A firm has the following monthly pattern of sales: January $ 200 February 300 March 600 April 900 May 600 June 300 Seventy percent of the sales are on credit and are collected after a month. The company pays wages each month that are 70 percent of sales and has fixed disbursements (for example, rent) of $50 a month. In March it receives $200 from a bond that matures; in April and June it makes a tax payment of $250. Management maintains a cash balance of $100 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $100. Round your answers to the nearest dollar. Enter the disbursements values in Part 2 and desired level of cash in Part 3 as positive values. Use a minus sign to enter cash outflows, shortage of cash values, negative initial and ending cash positions in Part 3, if any. Do not leave any cells blank. If the answer is zero, enter "0". Part 1 January February March April May June Anticipated sales $ $ $ $ $ $ Cash sales $ $ $ $ $ $ Accounts collected $ $ $ $ $ $ Other receipts $ $ $ $ $ $ Total receipts $ $ $ $ $ $ Part 2 Variable disbursements $ $ $ $ $ $ Fixed disbursements $ $ $ $ $ $ Other disbursements $ $ $ $ $ $ Total cash disbursements $ $ $ $ $ $ Part 3 Net change in cash $ $ $ $ $ $ Initial cash position $ $ $ $ $ $ Ending cash position $ $ $ $ $ $ Desired level of cash $ $ $ $ $ $ Excess (shortage) of cash $ $ $ $ $ $

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter15: Managing Short-term Assets

Section: Chapter Questions

Problem 14PROB

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Problem 24-01

A firm has the following monthly pattern of sales:

January	$	200
February		300
March		600
April		900
May		600
June		300

Seventy percent of the sales are on credit and are collected after a month. The company pays wages each month that are 70 percent of sales and has fixed disbursements (for example, rent) of $50 a month. In March it receives $200 from a bond that matures; in April and June it makes a tax payment of $250. Management maintains a cash balance of $100 at all times. Construct a cash budget that indicates the firm’s monthly needs for short-term financing. Its beginning cash position is $100. Round your answers to the nearest dollar. Enter the disbursements values in Part 2 and desired level of cash in Part 3 as positive values. Use a minus sign to enter cash outflows, shortage of cash values, negative initial and ending cash positions in Part 3, if any. Do not leave any cells blank. If the answer is zero, enter "0".

Part 1	January	February	March	April	May	June
Anticipated sales	$	$	$	$	$	$
Cash sales	$	$	$	$	$	$
Accounts collected	$	$	$	$	$	$
Other receipts	$	$	$	$	$	$
Total receipts	$	$	$	$	$	$
Part 2
Variable disbursements	$	$	$	$	$	$
Fixed disbursements	$	$	$	$	$	$
Other disbursements	$	$	$	$	$	$
Total cash disbursements	$	$	$	$	$	$
Part 3
Net change in cash	$	$	$	$	$	$
Initial cash position	$	$	$	$	$	$
Ending cash position	$	$	$	$	$	$
Desired level of cash	$	$	$	$	$	$
Excess (shortage) of cash	$	$	$	$	$	$

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