The company is subject to 30% tax rate. Below are the estimated incometax payments per quarter:f.First quarterP500 000Second quarter360 000Third quarter540 000Fourth quarter465 000g.Cash at the beginning of 2015 is P750 000. The company plans to increasethe target cash balançe to P1 million in 2016.h.Sale for the fourth quarter of 2015 was P15 million.Requirements: Prepare the 2016 cash budget. Find out if the company willhave enough cash to pay the P6-million property in the third quarter. Diogenes Dy, the general manager of DG Stores, wants to find out if theircompany has enough cash to pay for a P6-million piece of property which maybe the site of another branch. This is expected to be paid in the third quarterof 2016 should the company decide to buy it. He asked his chief accountant toprepare a cash budget. The following assumptions are used in the preparationof the cash budget.8.Projected quarterly sales are as follows:a.First quarterP12 millionSecond quarter15 millionThird quarter15 millionFourth quarter18 millionSeventy percent (70%) of the sales are collected in the quarter. Theremaining 30% is paid the following quarter.b.Cost of sales is 75% of sales. Inventories are purchased in the same quartersales were generated. Ninety percent of the purchases is paid within thequarter these purchases are made and the remaining 10% is paid thefollowing quarter.С.d.Included in fixed operating expenses are salaries, rent, security whichamount to P1 million for the first two quarters. The amount is expectedto increase to P1.25 million starting third quarter. Variable operating ex-penses are 5% of sales.e.Interest payments amount to P200 000 per quarter.

Let us first determine the cash collections in each quarter: Q4 15 Q1 16 Q2 16 Q3 16…

Answered: Requirements: Prepare the 2016 cash…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Requirements: Prepare the 2016 cash budget. Find out if the company will have enough cash to pay the P6-million property in the third quarter.