DATA:
Sales:
Credit 75%
Cash 25%
Collection of credit sales:
Current 31- 60 days 61 - 90 days 91 - 120 days
0% 60% 30% 10%
Sales (actual and estimated):
October 20X1 $300,000 March 20X2 $200,000
November 20X1 350,000 April 20X2 300,000
December 20X1 400,000 May 20X2 250,000
January 20X2 150,000 June 20X2 200,000
February 20X2 200,000 July 20X2 300,000
Payments for purchases of merchandise
as a percentage of the following month's sales: 80%
Wages and salaries:
January $30,000 April $50,000
February 40,000 May 40,000
March 50,000 June 35,000
Rent per month: $2,000
Interest expense (last day each quarter): $7,500
Tax payment April, 20X2 $50,000
Capital investment planned June, 20X2 $30,000
Cash balance December 31, 20X1 $100,000
Minimum level for cash $100,000
Borrowing increment $5,000
Schedule of projected sales and collections
for January to June (in thousands)
NOV DEC JAN FEB MAR
Frame A: Sales
Credit sales, 75%
Cash sales, 25%
Total sales, 100%
Frame B: Cash collections
Cash sales, this month
60% of last month's
credit sales
30% of two-month old
credit sales
10% of three-month old
credit sales
Total cash receipts
APR MAY JUNE
Schedule of projected total cash disbursements
for January to June (in thousands)
JAN FEB MAR APR MAY
Cash payments for:
Purchases
Wages and salaries
Rent
Interest
Tax
Capital investment
Total cash
disbursements
JUNE
Schedule of projected net cash flows
and cash balances for January to June (in thousands)
JAN FEB MAR APR MAY
Beginning cash balance,
without additional
financing
Total cash receipts
Total cash disbursements
Net cash flow
Ending cash balance,
without additional financing
Borrowing (repayment)
required to maintain
minimum cash balance
of $100,000
Ending cash balance,
with additional financing
JUNE
