Reference no: EM133157627

Question - NAG Company started its business in March 2022. That company produces shoes. To gain investors trust, NAG companies prepare projected cash flow for the next 3 months. Using information below, prepare cash budget for April, May, and June 2022. FINANCIAL DATA AT THE END OF MARCH 2022

a) Product sales in March 2022 were $525,000

b) Ending inventory in March 2022 is $220,000

c) There is no accounts payable at the end of March 2022

d) The cash balance in March 2022 is $12,000

SALES, PRODUCTION, AND INVENTORY ASSUMPTIONS a) Sales projection for: April 2022 is $600,000, May 2022 is $705,000, June 2022 is $750,000, July 2022 is $780,000 and August 2022 is $800,000 b) 35% sales are made on credit and will be collected on the following month. c) Company's COGS is 70% of sales. d) 50% inventories are purchased in credit and will paid on the following month e) NAG inventory policy is to begin a month with sufficient to cover 50% of sales for the month plus a $10,000 cushion. f) It tries to maintain 50% of COGS as an inventory at the beginning of month. g) The minimum cash balance is $12,000 h) Owners will lend funds in case of cash flow shortage, it loan has 1.5% interest per month

COST ASSUMPTIONS a) Employee's salary is $15,000 every month. Employees also earn a commission, 2% of each month sales. b) A half of salaries and commissions will be paid in current month and another half will be paid in the following month c) Building rental per month is $7,500 d) Insurance expenses is $2,100 per month e) Miscellaneous expense is 5% of monthly sales f) Owner plans to purchase machines in April 2022, machines price is $190,000 g) Depreciation expense (include new machines) is $7,500 each month. h) The tax that should be paid by the company each month is 1% of the monthly sales.

You are asked to create:

 a. Cash Schedule for April-July

b. Purchase Schedule April-July

c. Wages and Commission Schedule for April-July

d. Cash Budget for April-July