Question

CASH BUDGETING Helen Bowers, owner of Helen’s Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2019 and 2020:

May 2019	$180,000
June	180,000
July	360,000
August	540,000
September	720,000
October	360,000
November	360,000
December	90,000
January 2020	180,000

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

May 2019	$90,000
June	90,000
July	126,000
August	882,000
September	306,000
October	234,000
November	162,000
December	90,000

General and administrative salaries are approximately $27,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,700 a month. Income tax payments of $63,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.

1. Prepare a monthly cash budget for the last 6 months of 2019.

   Answer

   Oct: loan = $22,800

2. Prepare monthly estimates of the required financing or excess funds—that is, the amount of money Bowers will need to borrow or will have available to invest.

   Answer

   $111,300; $297,600; −$155,100; −$22,800; $118,500; $187,800

*HELP FIND THESE ANSWERS

Answer 1

*Any doubt please comment

	July	August	September	October	November	December
Op cash balance	132,000	201,300	387,600	-65,100	67,200	208,500
Receipts
10% of current month sales	36000	54000	72000	36000	36000	9000
75% of previous month sales	135000	270000	405000	540000	270000	270000
15% of the second previous month sales	27000	27000	54000	81000	108000	54000
Total receipts (A)	330,000	552,300	918,600	591,900	481,200	541,500
Payments
Labor plus raw materials	90,000	126,000	882,000	306,000	234,000	162,000
General and administrative salaries	27000	27000	27000	27000	27000	27000
Lease payments under long-term leases	9000	9000	9000	9000	9000	9000
Miscellaneous expenses	2700	2700	2700	2700	2700	2700
Income tax payments			63000			63000
Progress payment				180000
Total payments (B)	128,700	164,700	983,700	524,700	272,700	263,700
Required financing or excess funds [A-B-C]	111,300	297,600	-155,100	-22,800	118,500	187,800
Closing balance required [C]	90,000	90,000	90,000	90,000	90,000	90,000
Closing cash balance [Required financing or excess funds + Closing balance required]	201,300	387,600	-65,100	67,200	208,500	277,800