Prepare a monthly cash budget for the last months

Reference no: EM132210920

CASH BUDGETING Question -

Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017:

May 2016	$186,000
June	186,000
July	372,000
August	540,000
September	720,000
October	360,000
November	360,000
December	90,000
January 2017	180,000

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

May 2016	$90,000
June	90,000
July	126,000
August	883,000
September	307,000
October	234,000
November	161,000
December	90,000

General and administrative salaries are approximately $26,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,600 a month. Income tax payments of $62,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.

Prepare a monthly cash budget for the last 6 months of 2016.

Reference no: EM132210920

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