Reference no: EM132386417
Develop a Six-month Cash Budget (from October 2019 to March 2020) (1) arrange for a short-term borrowing agreement with the bank; (2) decide the best schedule for the large capital expenditure. The following is the available data for the problem.
1. Actual and expected sales data are given in the following table.
Sep/ 2019 Oct/ 2019 Nov/ 2019 Dec/ 2019 Jan/2020 Feb/2020 Mar/2020 Apr/2020
$568,000 $575,000 $598,000 $618,000 $632,000 $650,000 $667,000 $681,000
2. Sales: 60% cash, 40% collected in the following month.
3. Inventory = 58% of the sale in following month.
4. Inventory payments: 60% of inventory is paid for in the month of delivery, 40% is paid one month later.
5. Wages = 25% of the sales in the previous month.
6. Monthly interest payments = $15,000.
7. Principal payments $25,000 in November 2019 and February 2020
8. Dividend = $28,000 in October 2019 and January 2020
9. Taxes, $25,000 in December 2019, and $28,000 in March 2020
10. Capital expenditure scheduled in November 2019: $300,000, but the schedule is flexible and may be changed.
11. In September 2019, the ending cash balance is $38,000.
12. Minimum Cash Balance = $50,000
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