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Cash Budget Problem

Complete the following --use the attached spreadsheet template and fill in the blanks (send back as a reply to this note in this, the main newsgroup:

CASH BUDGETING PROBLEM

Norman Larson, a recent graduate of University of Phoenix with huge potential, has accepted a position as an entry level accountant with Builders R Us Manufacturing Company. The president of the company, U. R. Wright , has requested Norman to provide him with a cash flow for the period of April 30 to June 30, which happens to be the end of the current fiscal year. The following information is available:

All sales are credit sales, with 20% of sales collected in the month of sales, 60% collected in the month following sales, 15% collected in the second month following the sale, and the remaining 5% written off as bad debt losses in the sixth month following the sale. Raw materials purchased each month are 75% of the next month?s sales. Payment for raw materials is made during the month after the purchase. Norman is required to maintain a minimum balance of $5,000 in the checking account, and the balance on April 1st is $6,000. Rent, insurance, and other expenses are $1,000 per month.

Sales and wage data are as follows:

ACTUAL

Sales
Wages

February
$ 30,000
$ 3,000

March
$ 30,000
$ 3,000

ESTIMATED

Sales
Wages

April
$ 30,000
$ 3,000

May
$ 40,000
$ 4,000

June
$ 50,000
$ 5,000

July
$ 60,000
$ 6,000

August
$ 50,000
$ 5,000

September
$ 40,000
$ 4,000

Prepare the cash budget for the period April 30 through June 30. For any month during which a cash shortage is indicated, assume that the Friendly Online National Bank will make funds available. Use the budget worksheet provided to solve the problem.

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