JanuaryFebruaryMarchWages and salaries$250,000$290,000$290,000Rent27,00027,00027,000Other expenses10,00012,00014,000In addition, a tax payment of $105,000 is due on January 15, and $40,000 in dividends willbe declared in January and paid in March. Also, the company has ordered a $75,000 pieceof equipment. Delivery is scheduled for early January; and payment will be due in February.The company's projected cash balance at the beginning of January is $100,000, and thecompany desires to maintain a balance of $100,000 at the end of each month. Prepare a cash budget for Atlas Products, Inc. for the first year of 20X2, based onthe following information.The budgeting section of the corporate finance department of Atlas Productshas received the following sales estimates from the marketing department:Total SalesCredit SalesDecember 20X1$825,000$770,000January 20X2730,000690,000February 20X2840,000780,000March 20X2920,000855,000The company has found that, on average, about 25 percent of its credit sales arecollected during the month when the sale is made, and the remaining 75 percent of creditsales are collected during the month following the sale. As a result, the company uses thesefigures for budgeting.The company estimates its purchases at 60 percent of next month's sales, and paymentfor those purchases are budgeted to lag the purchases by 1 month.2.

Cash Budget The purpose of preparing the cash budget to know the details of total cash flows and…

January February March Wages and salaries $250,000 $290,000 $290,000 Rent 27,000 27,000 27,000 Other expenses 10,000 12,000 14,000 In addition, a tax payment of $105,000 is due on January 15, and $40,000 in dividends will declared in January and paid in March. Also, the company has ordered a $75,000 piece equipment. Delivery is scheduled for early January; and payment will be due in February. The company's projected cash balance at the beginning of January is $100,000, and the hpany desires to maintain a balance of $100.000 at the end of each month.

January February March Wages and salaries $250,000 $290,000 $290,000 Rent 27,000 27,000 27,000 Other expenses 10,000 12,000 14,000 In addition, a tax payment of $105,000 is due on January 15, and $40,000 in dividends will declared in January and paid in March. Also, the company has ordered a $75,000 piece equipment. Delivery is scheduled for early January; and payment will be due in February. The company's projected cash balance at the beginning of January is $100,000, and the hpany desires to maintain a balance of $100.000 at the end of each month.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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