Prepare the Cash Budget of the ABC Company

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Reference no: EM132842123

Question - ABC Company provides the following sales forecast and cash outflow forecast for the next three months June - August.

 

April

May

June

July

August

Sales

600,000

800,000

400,000

800,000

900,000

Cash outflow

 

 

720,000

640,000

660,000

Each months sales are 20% for cash and 80% on credit. Debtor Pay off debt in two equal installments. The first payment is due one month after purchase, the second payment is due two months after purchase.

The ABC company sells assets on August for $340,000.

On June 1, cash balance is equal to $200000.

Minimum cash balance is $40000 per month.

The bank allows the company to borrow in increments of $10,000 at the beginning of each month and the company required to pay the loan by the end of each month with interest rate of 12%.

1 year is 360 days.

REQUIRED -

1. Prepare the Cash Budget of the ABC Company?

2. Does the company need funding?

Reference no: EM132842123

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