1. Schedule of Expected Cash Collections:
July
87,500
25% in the
month of
Sale
70% in
175,000
following
month
3% in second 6,000
month
following the
same
Expected
268,500
Cash
Collections
August
93,750
September
55,000
Total
236,250
245,000
262,500
682,500
7,500
10,500
24,000
346,250
328,000
942,750
2. Cash Budget:
July
24,000
August
11,000
September
15,250
Total
24,000
Opening
Balance
Add: Cash
268,500
346,250
328,000
942,750
Collections
Loan Taken 20,000
20,000
Total
312,500
357,250
343,250
986,750
Available
Cash
Less:
157,500
210,000
218,750
586,250
Merchandise
Payments
Salaries and 52,000
54,000
53,000
159,000
Wages
Advertising 65,000
72,000
40,000
177,000
Rent
6,000
6,000
6,000
18,000
Payments
Equipment 21,000
21,000
purchase
Repayment
20,000
20,000
of Loan
Interest on
600
600
Loan
Total
301,500
342,000
338,350
981,850
Payments
Ending Cash 11,000
15,250
4,900
4,900
Balance
Depreciation is a non-cash expenditure, it is not considered in cash
budget.
3.If the company needs a minimum cash balance of $10,000 each
month, the loan cannot be repaid as planned. Since after paying the
loan, the cash balance will reach $4,900