In: Finance
Cash Budget Problem: Francesca’s Fragrances, Inc.
Prepare Cash Budget for April, May, June 2019
Follow the following to prepare the budget:
1. Real Sales 2019: January - $200,000
February - $400,000
March - $350,000
Projected for 2019: April - $500,000
May - $400,000
June - $450,000
Sales Payment History: 10% cash
30% Accts. Rec. – collected n/30 days
60% Accts. Rec. – collected n/60 days
Bad Debt Expense – negligible
Other Receipts:
Dividend due the firm - $30,000 in June.
Sale of Common Stock: $200,000 in June
2. Purchases: 75% of Sales – same month of expected sale.
10% Paid Cash
40% Paid 30 Days
50% Paid 60 Days
Rent: $8,000/month
Wages: 15% Sales + $9,000 Fixed Cost
Interest Payment: May = $120,000
Taxes: $40,000 in June
Sinking Fund: $15,000 due June
Dividend Payments: April: $60,000
Capital Investments: $10,000 in June
Repurchase or Retirement of Stock – None Anticipated
3. Cash Balances: @ 3/31 = $50,000; must maintain $35,000 Cash Balance Minimum
since the rate of intrest is not given it is assumed that there is no intrest on borrowings