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ABC Corporations: Average Cash Gain/Loss

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Cash budget

ABC Corporation's budgeted monthly sales are $4,000. Forty percent of its customers pay in the first month and take the 3 percent discount. The remaining 60% pay in the month following the sale and don't receive a discount. ABC's bad debts are very small and are excluded from this analysis. Purchases for next month's sales are constant each month at $2,000. Other payments for wages, rent, and taxes are constant at $500 per month. Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical month for ABC Corporation?

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Solution Summary

This solution identifies and provides brief calculations for determining and presenting the cash budget.

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Cash for current month of sale = $4000 x 40% x (1-3%) = ...

Solution provided by:
Gaurav Agarwal, MS
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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