Accounting problem cash budget
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3.The following is a forecast of sales and purchases by American Food Products
for the first four months of 2006.
month1 month2 month3 month4
credit sales 250,000.00 285,000.00 265,000.00 240,000.00
credit purchases 120,000.00 140,000.00 130,000.00 110,000.00
Insurance, rent, wages, and other expenses are 2%, 5%, 8%, and 1% of sales
respectively.
Notes:
1. On the average 70% of credit sales is paid in the month of sales,
and 30% one month following sales.
2. On the average 50% of credit purchases is paid in the month of purchase,
50% one month following purchase.
REQUIRED
Prepare a simple cash budget for the next four months of 2006.
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Solution Summary
Accounting problem cash budgets are examined.
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