- Sales: February 500,000; March $500,000; April $560,000; May $610,000; June $650,000; July $650,000. Assuming that sales are the only source of cash inflows and that half of them are for cash and the remainder are collected evenly over the following 2 months.
- Purchases: Purchases are calculated as 60% of the next month’s sales, 10% of purchases are made in cash, 50% of purchases are paid for 1 month after purchase, and the remaining 40% of purchases are paid for 2 months after purchase.
- Rent: The firm pays rent of $8,000 per month.
- Wages and salaries: Base wage and salary costs are fixed at $6,000 per month plus a variable cost of 7% of the current month’s sales.
- Taxes: A tax payment of $54,500 is due in June.
- Fixed asset outlays: New equipment costing $75,000 will be bought and paid for in April.
- Interest payments: An interest payment of $30,000 is due in June.
- Cash dividends: Dividends of $12,500 will be paid in April.
- Principal repayments and retirements: No principal repayments or retirements are due during these months.
Required
Maris Brothers, Inc., needs a cash budget for the months of February, March, April, May, June and July.
