The Simmons Company is planning to request a line of credit from its bank. The following sales forecasts have been made for parts of 2017 and 2018: In Rs May 2017 150,000 June 150,000 July 300,000 August 450,000 September 600,000 October 300,000 November 300,000 December 75,000 January 2018 150,000 Collection estimates obtained from the credit and collection department are as follows: collected within the month of sale, 5 percent; collected the month following the sale, 80 percent; collected the second month following the sale, 15 percent. Payments for labor and raw materials are typically made during the month following the month in which these costs are incurred. Total labor and raw materials costs are estimated for each month as follows: In Rs May 2017 75,000 June 75,000 July 105,000 August 735,000 September 255,000 October 195,000 November 135,000 December 75,000 General and administrative salaries will amount to approximately Rs 22,500 a month; lease payments under long-term lease contracts will be Rs 7,500 a month; depreciation charges will be Rs 30,000 a month; miscellaneous expenses will be Rs 2,250 a month; income tax payments of Rs 52,500 will be due in both September and December; and a progress payment of Rs 150,000 on a new research laboratory must be paid in October. Cash on hand on July 1 will amount to RS 110,000 and a minimum cash balance of Rs 75,000 will be maintained through-out the cash budget period. Prepare a cash budget for the last six months of 2017 with an estimate of required financing
The Simmons Company is planning to request a line of credit from its bank. The following
sales
In Rs
May 2017 150,000
June 150,000
July 300,000
August 450,000
September 600,000
October 300,000
November 300,000
December 75,000
January 2018 150,000
Collection estimates obtained from the credit and collection department are as follows: collected
within the month of sale, 5 percent; collected the month following the sale, 80 percent; collected
the second month following the sale, 15 percent.
Payments for labor and raw materials are typically made during the month following the month in
which these costs are incurred. Total labor and raw materials costs are estimated for each month
as follows:
In Rs
May 2017 75,000
June 75,000
July 105,000
August 735,000
September 255,000
October 195,000
November 135,000
December 75,000
General and administrative salaries will amount to approximately Rs 22,500 a month; lease
payments under long-term lease contracts will be Rs 7,500 a month;
Rs 30,000 a month; miscellaneous expenses will be Rs 2,250 a month; income tax payments of Rs
52,500 will be due in both September and December; and a progress payment of Rs 150,000 on a
new research laboratory must be paid in October. Cash on hand on July 1 will amount to RS
110,000 and a minimum cash balance of Rs 75,000 will be maintained through-out the
period.
Prepare a cash budget for the last six months of 2017 with an estimate of required financing
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