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How to create cash budget for january and march

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Reference no: EM132553879

The opening cash balance on the 1 st January was expected to be $30,000. The sales budgeted were as follows:

November 80,000

December 90,000

January 75,000

February 75,000

March 80,000

Analysis of records show that debtors settle according to the following pattern:

60% within the month of sale, 25% the month following, 15% the month following.

Extracts from the purchases budget were as follows:

December 60,000

January 55,000

February 45,000

March 55,000

  • All purchases are on credit and past experience shows that 90% are settled in the month of purchase and the balance settled the month after.
  • Wages are $15,000 per month and overheads of $20,000 per month (including $5,000 depreciation) are settled monthly.
  • Taxation of $8000 has to be settled in February and the company will receive settlement of an insurance claim of $25,000 in March.

Question 1: How to create cash Budget for January February and March.

Reference no: EM132553879

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