Current Asset Management Solutions 19

Current Asset Management Solutions 19 - Net Income 21....

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Unformatted text preview: Net Income 21. $42,000.00 $53,328.00 Assume that your company is constructing a monthly cash budget for the month of May, June, and July. You have been given the following data: • • • • • • • • It is currently the end of April (beginning of May). Actual sales were $2,000 in March and $1,500 in April. Forecasted sales are $1,800 for May, $2,300 for June, and $2,800 for July. Collections of sales are 20 percent in the month of sale, 55 percent the month after sale, and 20% two months after sale. Monthly expenses include salaries = $100; lease = $50; depreciation = $50, miscellaneous = $50; and a tax payment of $250 in July. Purchases and wages are equal to 80 percent of the current month's sales, but are paid for in the month after they are incurred. The starting cash balance at the beginning of May is $300. The firm desires to maintain a minimum cash balance of $400. Based on this information, determine how much excess cash (or loans) the firm will have at the end of July. (Note: the following table is provided for your convenience, its use is not required.) Cash Budget Sales Collections Month 0 - 20% Month 1 - 55% Month 2 - 20% Total P&W P&W Lagged Actual Forecasted March April May June July $2,000.00 $1,500.00 $1,800.00 $2,300.00 $2,800.00 $400.00 $300.00 $360.00 $460.00 $560.00 -$1,600.00 -$1,200.00 -$1,440.00 -$1,840.00 -$2,240.00 Salaries Lease Depreciation Miscellaneous Taxes Paid Total Gain (Loss) Cash at Start Cumulative Old Exam Questions - Current Asset Management - Solutions $300.00 Page 19 of 21 Pages ...
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