Forecasting Questions
LECTURE 3
CASH BUDGETING CLASS QUESTION 1
Alberta Limited needs a cash budget for the month of November. The following information is available: The cash balance on November 1 is $6,000.
Sales for October and November are $80,000 and $60,000 respectively. Cash collections on sales are 30 percent in the month of sale, 65 percent in the following month, and 5 percent uncollectible.
General expenses are budgeted to be $23,000 for November.
Inventory purchases will total $30,000 in October and $40,000 in November. Half of the inventory purchases are always paid for in the month of purchase. The remainder are paid for in the following month.
Office furniture costing $4,000 will be purchased for cash in November, and sales commissions are budgeted at $12,000 for November.
The company must maintain a minimum ending cash balance of $4,000 and can borrow from the bank in multiples of $100. All loans are repaid after 60 days.
Prepare a cash budget for Alberta Limited for November.
LECTURE 3
CASH BUDGETING CLASS QUESTION 2
Matthew and Sarah Weisner recently leased space in the Plaza Shopping Center and opened a new business, Weisner’s Ice Cream Shop. Business has been good but the Weisners frequently run out of cash. This has necessitated late payment on certain ice cream orders, which in turn is beginning to cause a problem with suppliers. The Weisners plan to borrow from a bank to have cash ready as needed, but first they must forecast how much cash will be needed. Therefore, they have decided to prepare a cash budget for June, July, and August to determine their cash needs. Ice cream sales are made on a cash basis only. The Weisners must pay for their ice cream orders 1 month after the purchase. Rent is $1,000 per month, and they pay themselves a combined salary of $2,400 per month. In addition, they must make a tax payment of $6,000 in June. The current cash on hand (June 1) is $200, but the Weisners have decided to maintain a target
CASH BUDGETING CLASS QUESTION 1
Alberta Limited needs a cash budget for the month of November. The following information is available: The cash balance on November 1 is $6,000.
Sales for October and November are $80,000 and $60,000 respectively. Cash collections on sales are 30 percent in the month of sale, 65 percent in the following month, and 5 percent uncollectible.
General expenses are budgeted to be $23,000 for November.
Inventory purchases will total $30,000 in October and $40,000 in November. Half of the inventory purchases are always paid for in the month of purchase. The remainder are paid for in the following month.
Office furniture costing $4,000 will be purchased for cash in November, and sales commissions are budgeted at $12,000 for November.
The company must maintain a minimum ending cash balance of $4,000 and can borrow from the bank in multiples of $100. All loans are repaid after 60 days.
Prepare a cash budget for Alberta Limited for November.
LECTURE 3
CASH BUDGETING CLASS QUESTION 2
Matthew and Sarah Weisner recently leased space in the Plaza Shopping Center and opened a new business, Weisner’s Ice Cream Shop. Business has been good but the Weisners frequently run out of cash. This has necessitated late payment on certain ice cream orders, which in turn is beginning to cause a problem with suppliers. The Weisners plan to borrow from a bank to have cash ready as needed, but first they must forecast how much cash will be needed. Therefore, they have decided to prepare a cash budget for June, July, and August to determine their cash needs. Ice cream sales are made on a cash basis only. The Weisners must pay for their ice cream orders 1 month after the purchase. Rent is $1,000 per month, and they pay themselves a combined salary of $2,400 per month. In addition, they must make a tax payment of $6,000 in June. The current cash on hand (June 1) is $200, but the Weisners have decided to maintain a target