Question

Ellis Electronics Company's actual sales and purchases for April and May are shown here, along with forecasted sales and purchases for June through September. April (actual) May (actual) June (forecast) July (forecast) August (forecast) September (forecast) Sales $370,000 350,000 325,000 325,000 340,000 380,000 Purchases $135,000 125,000 125,000 185,000 205,000 175,000 The company makes 20 percent of its sales for cash and 80 percent on credit. Of the credit sales, 50 percent are collected in the month after the sale and 50 percent are collected two months after. Ellis pays for 20 percent of its purchases in the month after purchase and 80 percent two months after. Labour expense equals 20 percent of the current month's sales. Overhead expense equals $12.500 per month. Interest payments of $32,500 are due in June and September. A cash dividend of $52,500 is scheduled to be paid in June. Tax payments of $25,500 are due in June and September. There is a scheduled capital outlay of $350,000 in September

Answer 1

Answer: Sales Cash Sales (10%) Credit Sales (90%) Collections (month after sale) 50% Collections (second month after sale) 50% Total Cash Receipts Ellis Electronics Cash Receipts Schedule April May June 370000 350000325000 74000 70000 65000 296000 280000 2600001 140000 130000 148000 343000 July 325000 65000 260000 130000 140000 335000 Aug. 340000 68000 272000 136000 130000 334000 Sept. 380000 76000 304000 152000 130000 358000 Ellis Electronics Cash Receipts Schedule April May 135000 125000 27000 June 25000 250001 108000 65000 125001 32500 525001 25500 July 185000 25000 100000 65000 12500 Aug. 205000 37000 100000 68000 12500 Purchases Payments (month after purchase—20%) Payments (second month after Labor Expense (20% of sales) Overhead Interest Payments Cash Dividend Taxes Capital Outlay Total Cash Payments Sept. 175000 41000 148000 76000 12500 32500 25500 350000 685500 202500 217500

Ellis Electronics Cash Budget June 343000 321000 22000 22500 44500 July 335000 202500 132500 50000 182500 Cash Receipts Cash Payments Net Cash Flow Beginning Cash Balance Cumulative Cash Balance Monthly Borrowing or (Repayment) Cumulative Loan Balance Marketable Securities Purchased (Sold) Cumulative Marketable Securities Ending Cash Balance August September 334000 358000 217500 685500 116500 -327500 50000 50000 166500 -277500 *12000 12000 116000 -248000 248000 50500 17500 132000 132000 50500 44500 *Cumulative Marketable Sec. (Aug) Cumulative Cash Balance (Sept) Required (ending) Cash Balance Monthly Borrowing 248000 -277500 17500 -12000