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    Average cash gain/loss using cash budget

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    Chadmark Corporation's budgeted monthly sales are $3,000. 40 percent of its customers pay in the first month and take 2 percent discount. The remaining 60 percent pay in the month following the sale and don't receive a discount. Chadmark's bad debts are very small and are excluded from this analysis. Purchases for next months sales are constant each month at $1,500. Other payments for wages, rent, and taxes are constant at $700 per month. Construct a single months cash budget with the information given. What is the average cash gain or (loss) during a typical month for Chadmark Corporation?

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    Cash Budget
    Collections (From current month 40%) 1200x0.98 $1,176
    From ...

    Solution Summary

    The solution explains how to prepare a cash budget and to use it to determine the average cash gain/loss during the month