Patrick's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows: Month January. February. Sales Revenue $250,000 350,000 Month March.... April All sales are on credit; 75% is collected during the month of sale, and 25% is collected during the next month. Cost of goods sold is 70% of sales. Payments for merchandise sold are made in the month fol- lowing the month of sale. Operating expenses total $125,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $55,000. Required Prepare monthly cash budgets for February, March, and April. Patrick's Retail Company Cash Budgets February, March, and April February March 55,000 $ 262,500 x 175,000 x 125,000 x 205,000 * $ Cash balance, beginning $ Total Cash receipts Cash available Total disbursements Cash balance, ending $ Sales Revenue $400,000 375,000 April 205,000 x $ 222,500 x 387,500✔ 381,250✔ 245,000 * 280,000 x 125,000 x 125,000 x 222,500 x 198,750 x $

Patrick's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows: Month January. February. Sales Revenue $250,000 350,000 Month March.... April All sales are on credit; 75% is collected during the month of sale, and 25% is collected during the next month. Cost of goods sold is 70% of sales. Payments for merchandise sold are made in the month fol- lowing the month of sale. Operating expenses total $125,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $55,000. Required Prepare monthly cash budgets for February, March, and April. Patrick's Retail Company Cash Budgets February, March, and April February March 55,000 $ 262,500 x 175,000 x 125,000 x 205,000 * $ Cash balance, beginning $ Total Cash receipts Cash available Total disbursements Cash balance, ending $ Sales Revenue $400,000 375,000 April 205,000 x $ 222,500 x 387,500✔ 381,250✔ 245,000 * 280,000 x 125,000 x 125,000 x 222,500 x 198,750 x $

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 5P

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Pilsner Inc. purchases raw materials on account for use in production. The direct materials purchases budget shows the following expected purchases on account: Pilsner typically pays 25% on account in the month of billing and 75% the next month. Required: 1. How much cash is required for payments on account in May? 2. How much cash is expected for payments on account in June?
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