Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change. Texas Rex expects the following Cash Receipts in each quarter: Q1 Q2 Q3 Q4 $10,600 $11,850 $14,775 $19,625 Texas Rex believes the amount of cash needed for payments on account for raw materials each quarter is: Q1 Q2 Q3 Q4 $4,594 $5,039 $6,219 $6,819 The Cash Budget is critically important to the survival of businesses. It tells management how much cash is available and shortfalls of cash need to be anticipated and handled through expense reductions or financing. Assume that Texas Rex’s beginning cash balance is $5200. The company requires a $1000 minimum cash balance for the end of each quarter. Money can be borrowed in increments of $1000. Interest is 12% per year. Borrowings take place at the beginning of a quarter and repayments occur at the end of a quarter. Budgeted depreciation is $540 per quarter for overhead and $150 per quarter for selling and administrative expenses. The company plans to purchase additional screen printing equipment at a cost of $6500 in the first quarter. Corporate income taxes are expected to be $3469 and will be paid at the end of the fourth quarter. Texas Rex, Inc. Cash Budget For the year ending December 31, 2018 Q1 Q2 Q3 Q4 Total Beginning Cash Balance Cash Collections _______ _______ ________ _______ ________ Total Cash Available Less Cash Payments for: Raw Materials Direct Labor Overhead S & Adm Expenses Income Taxes Equipment _______ _______ ________ _______ ________ Total Disbursements What is the formula sheet?

Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change. Texas Rex expects the following Cash Receipts in each quarter: Q1 Q2 Q3 Q4 $10,600 $11,850 $14,775 $19,625 Texas Rex believes the amount of cash needed for payments on account for raw materials each quarter is: Q1 Q2 Q3 Q4 $4,594 $5,039 $6,219 $6,819 The Cash Budget is critically important to the survival of businesses. It tells management how much cash is available and shortfalls of cash need to be anticipated and handled through expense reductions or financing. Assume that Texas Rex’s beginning cash balance is $5200. The company requires a $1000 minimum cash balance for the end of each quarter. Money can be borrowed in increments of $1000. Interest is 12% per year. Borrowings take place at the beginning of a quarter and repayments occur at the end of a quarter. Budgeted depreciation is $540 per quarter for overhead and $150 per quarter for selling and administrative expenses. The company plans to purchase additional screen printing equipment at a cost of $6500 in the first quarter. Corporate income taxes are expected to be $3469 and will be paid at the end of the fourth quarter. Texas Rex, Inc. Cash Budget For the year ending December 31, 2018 Q1 Q2 Q3 Q4 Total Beginning Cash Balance Cash Collections ___ _ __ _ __ Total Cash Available Less Cash Payments for: Raw Materials Direct Labor Overhead S & Adm Expenses Income Taxes Equipment _ _ _ ______ Total Disbursements What is the formula sheet?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter21: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 10MC

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Texas Rex sells t-shirts. Expected sales for each quarter is 1000, 1200, 1500, and 2000 t-shirts at $10.00 each. They anticipate no price change.

Texas Rex expects the following Cash Receipts in each quarter:

Q1 Q2 Q3 Q4

$10,600 $11,850 $14,775 $19,625

Texas Rex believes the amount of cash needed for payments on account for raw materials each quarter is:

Q1 Q2 Q3 Q4

$4,594 $5,039 $6,219 $6,819

The Cash Budget is critically important to the survival of businesses. It tells management how much cash is available and shortfalls of cash need to be anticipated and handled through expense reductions or financing.

Assume that Texas Rex’s beginning cash balance is $5200. The company requires a $1000 minimum cash balance for the end of each quarter. Money can be borrowed in increments of $1000. Interest is 12% per year. Borrowings take place at the beginning of a quarter and repayments occur at the end of a quarter.

Budgeted depreciation is $540 per quarter for overhead and $150 per quarter for selling and administrative expenses. The company plans to purchase additional screen printing equipment at a cost of $6500 in the first quarter. Corporate income taxes are expected to be $3469 and will be paid at the end of the fourth quarter.

Texas Rex, Inc.

Cash Budget

For the year ending December 31, 2018

Q1 Q2 Q3 Q4 Total

Beginning Cash Balance

Cash Collections _______ _______ ________ _______ ________

Total Cash Available

Less Cash Payments for:

Raw Materials

Direct Labor

Overhead

S & Adm Expenses

Income Taxes

Equipment _______ _______ ________ _______ ________

Total Disbursements

What is the formula sheet?

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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