Question

The following data are from the budget of Ritewell Publishers. Half the company’s sales are transacted on a cash basis. The other half are paid for with a 1-month delay. The company pays all of its credit purchases with a 1-month delay. Credit purchases in January were $70, and total sales in January were $220.

	February				March				April
Total sales	$	280			$	300			$	260
Cash purchases		90				100				80
Credit purchases		60				50				60
Labor and administrative purchases		50				50				50
Taxes, interest, and dividends		30				30				30
Capital expenditures		140				0				0

Complete the following cash budget.

February March April Sources of cash Collections on current sales Collections on amounts receivable Total sources of cash Uses of cash Payments of accounts payable Cash purchases Labor and administrative expenses Capital expenditures Taxes, interest, and dividends Total uses of cash Net cash inflow Cash at start of period $140 + Net cash inflow = Cash at end of period + Minimum operating cash balance $140 = Cumulative short-term financing required

Answer 1

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