Prepare dorian cash budget for the period march to june

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Question - Dorian Industries' projected sales for the first six months of 2017 are given below:

Jan.

$200,000

April

$400,000

Feb.

$240,000

May

$320,000

March

$280,000

June

$320,000

25% of sales is collected in cash at the time of the sale, 50% is collected in the month following the sale, and the remaining 25% is collected in the second month following the sale. Cost of goods sold is 75% of sales. Purchases are made in the month prior to the sale, and payments for purchases are made in the month of the sale. Total other cash expenses are $60,000/month. The company's cash balance as of February 28, 2017 will be $40,000. Excess cash will be used to retire short-term borrowing (if any). Dorian has no short-term borrowing as of February 28, 2017. Assume that the interest rate on short-term borrowing is 1% per month. The company must have a minimum cash balance of $25,000 at the beginning of each month. Round all answers to the nearest $100.

Required - Prepare Dorian's Cash Budget for the period March to June 2017.

Reference no: EM133091844

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