Question

ABC Company has the following forecasts:

Month Sales Forecast( $000)

October 2017 $1,000

November 1,500

December 3,000

Notes: All sales are made on credit terms of net 30 days and are collected all in the following month;

There is $700 accounts receivable at the end of September;

Inventory on hand represents a safety stock level and will be maintained.

Inventory is purchased in the month of sale and paid for in cash.

Cost of goods sold average 80 percent of sales.

Total wages and commissions fixed at $100 per month; all paid within the same month;

Beginning cash is $50,000

Questions: Based on the sales forecast, for the months of November and December, use the ABC Cash Budget Excel template to:

A) Develop a receivable schedule

B) Develop an purchase schedule

C) Develop a cash budget based on above information

Answer 1

Details	Oct	Nov	Dec
Total Sales	1,000	1,500	3,000
Type of Sale:
Credit 100%	1,000	1,500	3,000
Collection of Receivables:
Next Month 100%	700	1,000	1,500
Total Budgeted Cash Receipts	700	1,000	1,500
Purchases required 80% of Sales	800	1,200	2,400
Payables:
Same Month 100%	800	1,200	2,400
Other Cash Payments :
Wages and Commisions	100	100	100
Total Budgeted Cash Payments	900	1,300	2,500
Cash Budget	Oct	Nov	Dec
Beginning Cash Balance	50,000	49,800	49,500
Add: Total Budgeted Cash Receipts	700	1,000	1,500
Less: Payments	900	1,300	2,500
Cash Available	49,800	49,500	48,500