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    Cash Budget

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    23. Cash Budget. The following data are from the budget of Ritewell Publishers. Half the company's
    sales are transacted on a cash basis. The other half are paid for with a 1-month delay.
    The company pays all of its credit purchases with a 1-month delay. Credit purchases in January
    were $30 and total sales in January were $180.
    Working Capital Management and Short-Term Planning 195
    February March April
    Total sales 200 220 180
    Cash purchases 70 80 60
    Credit purchases 40 30 40
    Labor and administrative expenses 30 30 30
    Taxes, interest, and dividends 10 10 10
    Capital expenditures 100 0 0
    Complete the following cash budget:
    February March April
    Sources of cash
    Collections on current sales
    Collections on accounts receivable
    Total sources of cash
    Uses of cash
    Payments of accounts payable
    Cash purchases
    Labor and administrative expenses
    Capital expenditures
    Taxes, interest, and dividends
    Total uses of cash
    Net cash inflow
    Cash at start of period 100
    + Net cash inflow
    = Cash at end of period
    + Minimum operating cash balance 100 100 100
    = Cumulative short-term financing required

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    Solution Summary

    The solution explains how to prepare a cash budget