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    Cash Budget for Ritewell Publishers

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    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.

    February March April

    Total sales 200 220 180
    Cash purchases 70 80 60
    Credit Purchases 40 30 40
    Labor and administrative exp 30 30 30
    Taxes,interest, and dividends 10 10 10
    Capital expenditures 100 0 0

    What is the cash budget February March April

    Sources of Cash

    Collections on current sales
    Collections on AR
    Total sources of cash

    Uses of Cash

    Payments of accounts payable
    Cash Purchases
    Labor and administrative expenses
    Capital expenditures
    Taxes,interest and dividends
    Total use of cash

    Net cash inflow
    Cast at start of period 100
    +net cash inflow
    =cash at end of period
    + min operating cash balance 100 100 100
    =cumulative short-term financing required

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    Solution Summary

    The solution prepares Cash Budget for Ritewell Publishers.