2) Create a Cash Budget for the month of March using the following information (

Question

2) Create a Cash Budget for the month of March using the following information (15pts):

            70% of sales are on account and are collected in cash in the month in which they occur

            30% of sales are on account and are collected in the month after they occur

            80% of expenses are on account and are paid in the month in which they occur

            20% of expenses are on account and are paid in the month after they occur

            February had $110,000 of sales and $55,000 of expenses

            March had $130,000 of sales and $80,000 of expenses

            The cash balance at the end of February was $55,000

            The minimum cash balance is $115,000

Explanation / Answer

Dear Student Thank you for using Chegg Please find below the answer Cash Budget Paticulars Amount Beginning Cash Balance                 55,000.00 Collections : Collection of February sales = 110000*.30                 33,000.00 Collection of March sales = 130000*.70                 91,000.00 Total collections0               124,000.00 Payments: Payment for february expenses = 55000*.20                 11,000.00 Payment for March expenses = 80000 *.80                 64,000.00 Total Payment                 75,000.00 Cash balance before adj = 55000 + 124000 -75000               104,000.00 Minimum cash balance               115,000.00 Borrowings                 11,000.00 Ending cash balance after borrowing               115,000.00

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