sales forecasts have been made for parts of 2017 and 2018: In Rs May 2017 150,000 June 150,000 July 300.000 August 450,000 September 600,000 October 300,000 November 300,000 December 75,000 January 2018 150.000 Collection estimates obtained from the credit and collection department are as follows: collected within the month of sale, 5 percent; collected the month following the sale, 80 percent; collected the second month following the sale, 15 percent. Payments for labor and raw materials are typically made during the month following the month in which these costs are incurred. Total labor and raw materials costs are estimated for each month as follows: In Rs Мay 2017 June 75,000 75,000 July 105,000 August 735,000 September 255,000 October 195,000 November 135,000 December 75,000 General and administrative salaries will amount to approximately Rs 22,500 a month; lease payments under long-term lease contracts will be Rs 7,500 a month; depreciation charges will be Rs 30,000 a month; miscellaneous expenses will be Rs 2,250 a month; income tax payments of Rs 52,500 will be due in both September and December; and a progress payment of Rs 150,000 on a new research laboratory must be paid in October. Cash on hand on July 1 will amount to RS 110,000 and a minimum cash balance of Rs 75,000 will be maintained through-out the cash budget period. Prepare a cash budget for the last six months of 2017 with an estimate of required financing (or excess funds).
sales forecasts have been made for parts of 2017 and 2018: In Rs May 2017 150,000 June 150,000 July 300.000 August 450,000 September 600,000 October 300,000 November 300,000 December 75,000 January 2018 150.000 Collection estimates obtained from the credit and collection department are as follows: collected within the month of sale, 5 percent; collected the month following the sale, 80 percent; collected the second month following the sale, 15 percent. Payments for labor and raw materials are typically made during the month following the month in which these costs are incurred. Total labor and raw materials costs are estimated for each month as follows: In Rs Мay 2017 June 75,000 75,000 July 105,000 August 735,000 September 255,000 October 195,000 November 135,000 December 75,000 General and administrative salaries will amount to approximately Rs 22,500 a month; lease payments under long-term lease contracts will be Rs 7,500 a month; depreciation charges will be Rs 30,000 a month; miscellaneous expenses will be Rs 2,250 a month; income tax payments of Rs 52,500 will be due in both September and December; and a progress payment of Rs 150,000 on a new research laboratory must be paid in October. Cash on hand on July 1 will amount to RS 110,000 and a minimum cash balance of Rs 75,000 will be maintained through-out the cash budget period. Prepare a cash budget for the last six months of 2017 with an estimate of required financing (or excess funds).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:III. The Simmons Company is planning to request a line of credit from its bank. The following
sales forecasts have been made for parts of 2017 and 2018:
In Rs
May 2017
150,000
June
150,000
July
300,000
August
450,000
September
600.000
October
300,000
November
300,000
December
75,000
January 2018
150,000
Collection estimates obtained from the credit and collection department are as follows: collected
within the month of sale, 5 percent; collected the month following the sale, 80 percent; collected
the
ond month following
sale, 15 percent.
Payments for labor and raw materials are typically made during the month following the month in
which these costs are incurred. Total labor and raw materials costs are estimated for each month
as follows:
In Rs
May 2017
75,000
June
75,000
July
105,000
August
735,000
September
255,000
October
195,000
November
135,000
December
75,000
General and administrative salaries will amount to approximately Rs 22,500 a month; lease
payments under long-term lease contracts will be Rs 7,500 a month; depreciation charges will be
Rs 30,000 a month; miscellaneous expenses will be Rs 2,250 a month; income tax payments of Rs
52,500 will be due in both September and December; and a progress payment of Rs 150,000 on a
new research laboratory must be paid in October. Cash on hand on July 1 will amount to RS
110,000 and a minimum cash balance of Rs 75,000 will be maintained through-out the cash budget
period.
Prepare a cash budget for the last six months of 2017 with an estimate of required financing
(or excess funds).
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