Reference no: EM132797923
Question -
Case 1 - Lions Gate Equipment has estimated the Sales Forecast for 2021 as follows:
January $200,000
February $200,000
March $180,000
April $160,000
The Sales for November 2020 and December 2020 were: $160,000 and $180,000
The terms given to customers are: 2/10 net 30
Estimates regarding the payments are:
30% will pay in the month of sale and take the discount
60% will pay the month following the sale and do not take the discount
10% will pay in the 2nd month following the sale
Purchases are estimated to be 80% of the Sales for the following month and are paid in 30 days.
Other expenses:
Rent $8,000 each month
Utilities $1,800 each month
Salaries $20,000 each month
Misc. $2,000 each month
Income Tax $12,000 are due in March
The Cash on Hand on January 1, 2021 is $10,000.
A minimum cash balance of $10,000 is to be maintained.
Required - Prepare the Cash Budget for the Jan, Feb, and Mar.
What is the maximum loan required?
Case 2 - While its accountant was on vacation, a company discovered that it was the victim of a phony invoice scheme, having paid more than $2.3 million to two non-existent companies. It was the accountant's job to review and approve invoices and sign the cheques to ensure they were paid. What should the company do to prevent this from happening again? Note: please describe as much as you could.