Reference no: EM13895678
Cash budgeting
Avallone’s Pool Services Co. had sales of $2 million in March and $2.2 million in April. Expected sales for the next three months are $2.4 million, $2.5 million, and $2.7 million. Avallone’s has a cash balance of $200,000 on May 1 and does not want its balance to dip below that level. Prepare a cash budget for May, June, and July given the following information:
Of total sales, 30% are for cash, 50% are collected in the month after the sale, and 20% are collected two months after the sale.
Avallone’s has cash receipts from other sources of $100,000 per month.
The firm expects to purchase items for $2 million in each of the next three months. All purchases are paid for in cash.
Avallone’s has fixed cash expenses of $150,000 per month and variable cash expenses equal to 5% of the previous month’s sales.
Avallone’s will pay a cash dividend of $300,000 in June.
The company must make a $250,000 loan payment in June.
Avallone’s plans to acquire fixed assets worth $500,000 in July.
Avallone’s must make a tax payment of $225,000 in June.
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About the cash budgeting
: Avallone’s Pool Services Co. had sales of $2 million in March and $2.2 million in April. Expected sales for the next three months are $2.4 million, $2.5 million, and $2.7 million. Avallone’s has cash receipts from other sources of $100,000 per month...
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