Purchase Solution

Accounting: Cash budget.

Not what you're looking for?

Ask Custom Question

Evaluate this scenario:

The expected sales are 100,000$ during the next three months. It will make monthly purchases of 60,000$ during this time. Wages and salaries are 10,000$ per month plus 5% of the sales. The company expects to make a tax payment of 20,000$ in the first month, a 15,000$ purchase of fixed assets the second month and to receive 8,000$ in cash from the sale on an asset in the third month. All sales and purchases are for cash. Beginning cash and the minimum cash balance are assumed to be zero.

Because the company is unsure of the sales levels during this period, there is some concern over cash balance from month to month. As the financial manager, it is your responsibility to prepare a cash budget for the next three months. Also, briefly discuss how you can use this information to evaluate the cash needs of the company and any funding decisions needing to be made.

Purchase this Solution
Solution Summary

The problem set deals with estimating the cash budget.

Solution Preview

Evaluate this scenario:

The expected sales are 100,000$ during the next three months. It will make monthly purchases of 60,000$ during this time. Wages and salaries are 10,000$ per month plus 5% of the sales. The company expects to make a tax payment of 20,000$ in the first month, a 15,000$ purchase of fixed assets the second month and to receive 8,000$ in cash from the sale on an asset in the third month. All sales and purchases are for cash. Beginning ...

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
Recent Feedback
  • "Thank you."
  • "thank you Chidi Ngene.. if you have any APA references would be great"
  • "Thank you so much for your help, your explanations were easy to understand and apply!"
  • "are you able to highlight the equations used either on the xlsx or a word doc as to how each graph was formed- overall looks fine i just need help understanding this myself"
  • "Chidi Ngene, M. Sc. Was extremely helpful as without the help and guidance I would have failed, but with the help I passed. I still have a lot to learn and in need of the guidance to understand and learn more on the subject. I would recommend Chidi Ngene and BrainMass to anyone that are in need of help. Thank you!!"
Purchase this Solution
Free BrainMass Quizzes
Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Operating budget versus a cash budget

    A cash budget is a plan for the next accounting period, much as the operating budget except it forecasts only when cash will be required and when it will be spent.

  • Evaluate Home Depot Budget

    Cash Budget Cash budget will also be useful for Home Depot to effectively manage the inflows and outflows of cash.

  • Accounting Multiple Choice - Cannon Company

    Cash Flow + - n/a n/a n/a n/a n/a n/a Which of the following accounting events could have caused the indicated effects on the firm's accounting equation?

  • Cash Budget

    253440 Accounting Kim incorporated is preparing its master budget for 2004. In addition to the cash flows listed, assume that the company expects to pay $10,000 in income taxes each quarter.

  • Budgets for Healthcare Organization

    of two budgets developed using the accrual basis of accounting, the revenue budget and expense budget.

  • Why would a company need to create a master budget?

    It consists basically of a pro-forma income statement, pro-forma balance sheet, and cash budget."

  • The Cash Budget of Regis Golf Park

    235268 The Cash Budget of Regis Golf Park You recently began a job as an accounting intern at Regis Golf Park. Your first task was to help prepare the cash budget for April and May.

  • A comparison of Government accounting practices

    For profit accounting uses accrual accounting which recognizes income and expenses when they occur, regardless of when the cash exchange actually happens. Government accounting tends to operate in a cash accounting basis.

  • Production Budget, CVP Analysis, Relevant Costs

    While dividends should only be a fraction of free cash flows, just having free cash flows does not mean you SHOULD pay out a substantial portion of it. 7. What is the difference between financial accounting and managerial accounting?

  • Accounting problem cash budget

    REQUIRED Prepare a simple cash budget for the next four months of 2006. Hello Please find the answer attached. Thanks Accounting problem cash budgets are examined.

View More Related Solutions