Mr. James Pastor, a financial analyst for ABC Company, has prepared the following actual sales and cash disbursement for the months of August to September 2020 and estimates for the months of October to December of the current year: Month Sales: August P5,000,000; September P6,000,000; October P4,000,000; November P2,000,000; and December P2,000,000 Cash Disbursements: August P4,000,000; September P3,000,000; October P6,000,000; November P5,000,000; and December P2,000,000. Pastor notes that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after the sale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a monthly minimum cash balance of P250,000. Balances above this amount would be invested in short-term government securities (marketable securities) whereas any deficits would be financed through short-term bank borrowings (notes payable). The beginning cash balance at October 1 is P1,200,000.a. Prepare cash budgets for October, November and December.b. How much
Mr. James Pastor, a financial analyst for ABC Company, has prepared the following actual sales and cash disbursement for the months of August to September 2020 and estimates for the months of October to December of the current year: Month Sales: August P5,000,000; September P6,000,000; October P4,000,000; November P2,000,000; and December P2,000,000 Cash Disbursements: August P4,000,000; September P3,000,000; October P6,000,000; November P5,000,000; and December P2,000,000. Pastor notes that historically, 30% of sales have been for cash. Of credit sales, 70% are collected 1 month after the sale, and the remaining 30% are collected 2 months after the sale. The firm wishes to maintain a monthly minimum cash balance of P250,000. Balances above this amount would be invested in short-term government securities (marketable securities) whereas any deficits would be financed through short-term bank borrowings (notes payable). The beginning cash balance at October 1 is P1,200,000.a. Prepare
Step by step
Solved in 2 steps
