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    XYZ Corporation: Cash Budget and Average Cash Gain

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    XYZ Corporation's budgeted monthly sales are $4,500. Forty percent of its customers pay in the first month and take the 1 percent discount. The remaining 60 percent pay in the month following the sale and don't receive a discount. XYZ's bad debts are very small and are excluded from this analysis. Purchases for next month's sales are constant each month at $1,200. Other payments for wages, rent, and taxes are constant at $800 per month.

    Construct a single month's cash budget with the information given. What is the average cash gain or (loss) during a typical month for XYZ Corporation?

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    Solution Summary

    Solution is provided in the excel sheet with all the calculations. The cash budget and average cash gain are computed with all the formulas included.