Make a cash budget for the months ending January

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Reference no: EM132777207

Question - Red Maple Corporation sells gizmos. All sales are on account and collected 50% in the month of sale, 50% in the month following sale. In December 2017 sales were $40,000. In 2018 January sales were $32,000 and February sales were $35,000. Projected sales for March are 2,700 gizmos at $12 each. The cash balance at December 31 2017 was $11,430.

In 2018 Red Maple purchased $24,000 of materials in January, $15,400 in February and $28,000 in March. All purchases are paid for in the month of purchase. All other expenses are $14,600 per month and are paid in the month of purchase. Depreciation of $1000 is included in the month expenses of $14,600 for January only.

Red Maple must maintain a $20,000 balance and can borrow at an interest rate of 4% per annum if necessary.

Required - Make a cash budget for the months ending January and February 2018 in good form?

Reference no: EM132777207

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