please show work!!! Prepare a cash budget for the next two months based on the f

Question

please show work!!! Prepare a cash budget for the next two months based on the following information, showing total cash receipts, total cash payments, and beginning and ending balances of cash. You expect to borrow $20,000 from the bank to get your business going. In the first month, you plan to purchase supplies and equipment of $12,000. Expected sales are $30,000 for the first month and $38,000 for the second month. You expect to receive 30% of sales in cash sales and of the remaining amount 80% in the month of sale and 20% in the following month. You have fixed monthly expenses of $8,000. Variable monthly expenses are expected to be $4,000 in the first month and $5,000 in the second month. You will also need to make interest payments on your loan each month based on a 14% annual interest rate (principle will not be repaid until later this year).

Explanation / Answer

Cash Budget 1st month 2nd Month Opening - 31,566.67 Cash Reciept Cash Sale 9,000.00 11,400.00 Received from Debtor 16,800.00 25,480.00 Bank borrow 30,000.00 - Total Cash Reciept 55,800.00 36,880.00 Cash Payment Fixed expenses 8,000.00 8,000.00 Variable Expense 4,000.00 5,000.00 Purchase Equipment 12,000.00 - Interest Payment 233.33 233.33 Total Cash Payment 24,233.33 13,233.33 Closing Cash Balance 31,566.67 55,213.34

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