Question

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Problem 4 In-tech Corporation's sales and purchases for the last three months are as following: October November December Sales (S) 100,000 90,000 120,000 Purchases (S) 80,000 100,000 75,000 For the next three months, it estimates sales and purchases to be as following: January February March Sales (9) 90.000 80,000 80,000 Purchases (S) 70,000 70,000 70,000 It pays 40 percent of purchases in cash and gets a 4 percent discount. Another 40 percent of purchases are paid the next month, and the final 20 percent of purchases are paid in the second month after the purchase (for example, 40 percent of October purchases are paid in October, 40 percent October purchases are paid in November, and 20 percent October purchases are paid in December). Half of the sales are made in cash, and the balance is collected the next month. Cash sales are given a two percent discount, and five percent of credit sales end up as bad debt. The monthly operating expenses for In-tech Corporation's are $10,000. In-tech expects to sell one of its machinery in March for $25,000. It will buy the replacement in April for $50,000. The cash balance as on December 31 was $50,000. In-tech has a target cash balance of $50,000. Prepare a monthly cash budget for the next three months.

Answer 1

Answer Given that purches and sales. Sales workings I oct 1 Nov Dec 1 Jan Feb 100,000 90.000 190,000 90.000 80,000 80,000 100,000 75,000 70,000 70,000 Man 89000 70,000 purchasy opening capho Balance 50,000 64,920 66,990 Cash salos 50% in Ceghin 50,000 45,000 60,000 45,000 40.000 40,000 month 27 -900 discount -1000 -1200-900 - 800 - 800 month 50% in heutu 50,000 45,000 60,000 45,000 40,000 5% bad debt -2500-2250 - 3000 -2250 - 2000 140% in current vent-32,000 -40,000-30,000 - 28000 -28,000 -28,000 month 4% 1280 1600 1200 1120 11201 1120. ash cash Purchas Cash I discount -32,000 -40,000/ - 30,000) - 28000 - 28000 40% in heut Month 20% in next to schnertrithe -16000-20,000 – 15.000 -14,000 CS cam Monthet

sperating expenses : -10,000 Cevery month) outfit machinery sold = 25000 - Total cash balance a Jan = 64,220 Feb = 66,290 Mar 89,610 . Target cash = 50,000 0 (every Month) - The End Scanned with CamScanner