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Three-Month Cash Budget with a Few Variables

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See the attached file.
Pharma Drug Store is a pharmacy in Portland, Maine, owned by Jane Smith, a local pharmacist. Pharma business has been good, but Ms. Smith finds that she frequently runs out of cash. To date, she has dealt with this cash shortfall by delaying payment to the drug suppliers, which is starting to cause problems. Instead of delaying payment, Ms. Smith has decided that she should borrow from the bank to have cash ready when needed. To have an estimate of how much she must borrow over the next three months, she must prepare a cash budget.

All of Pharma's sales are made on a cash basis, but drug purchases must be paid for during the following month. Ms. Smith pays herself a salary of $4,800 per month, the rent on her store is $2,000 per month, and a $12,000 payment for taxes is due in December. On December 1, there is $400 cash on hand, but Ms. Smith wants to maintain a target cash balance of $6,000. Pharma's estimated sales are $160,000 for December, $40,000 for January, and $60,000 for February. Estimated drug purchases are $140,000 for November, $40,000 for December, $40,000 for January, and $40,000 for February.

Prepare a cash budget for December, January, and February. Needs to be in Excel format.

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The solution determines the three-month cash budget with a few variables.

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