Question

Helen Bowers, owner of Helen's Fashion Designs, is planning to request a line of credit from her bank. She has estimated the following sales forecasts for the firm for parts of 2016 and 2017:

may 2016	$186,000
june	186,000
july	372,000
august	540,000
september	720,000
october	360,000
november	360,000
december	90,000
january 2017	180,000

Estimates regarding payments obtained from the credit department are as follows: collected within the month of sale, 10%; collected the month following the sale, 75%; collected the second month following the sale, 15%. Payments for labor and raw materials are made the month after these services were provided. Here are the estimated costs of labor plus raw materials:

may 2016	$90,000
June	90,000
july	126,000
august	881,000
september	307,000
october	234,000
november	162,000
december	90,000

a.General and administrative salaries are approximately $26,000 a month. Lease payments under long-term leases are $9,000 a month. Depreciation charges are $36,000 a month. Miscellaneous expenses are $2,600 a month. Income tax payments of $63,000 are due in September and December. A progress payment of $180,000 on a new design studio must be paid in October. Cash on hand on July 1 will be $132,000, and a minimum cash balance of $90,000 should be maintained throughout the cash budget period.

Prepare a monthly cash budget for the last 6 months of 2016. If no entry required, enter "0". Use minus sign to enter losses, loans outstanding or any other negative amounts.

may

june

july

august

september

october

november

december

january

collecions and purchases worksheet

sales (gross)

$

$

$

$

$

$

$

$

$

collections

during month of sale

$

$

$

$

$

$

$

$

during 1st month after sale

$

$

$

$

$

$

$

$

during 2nd month after sale

$

$

$

$

$

$

$

$

total collections

$

$

$

$

$

$

purchases

labor and raw materials

$

$

$

$

$

$

$

$

payments for labor and raw materials

$

$

$

$

$

$

$

cash gain or loss for month

collections

$

$

$

$

$

$

payments for labor and raw materials

$

$

$

$

$

$

general and administrative salaries

$

$

$

$

$

$

lease payments

$

$

$

$

$

$

miscellaneous expenses

$

$

$

$

$

$

income tax payments

$

$

$

$

$

$

design studio payment

$

$

$

$

$

$

total payments

$

$

$

$

$

$

net cash gain (loss) during month

$

$

$

$

$

$

Loan Requirement or cash surplus

cash at start of month

$

$

$

$

$

$

cumulative cash

$

$

$

$

$

$

target cash balance

$

$

$

$

$

$

cumulative surplus cash or loans outstanding to maintain $90,000 target cash balance

$

$

$

$

$

$

b. Prepare monthly estimates of the required financing or excess funds - that is, the amount of money Bowers will need to borrow or will have available to invest. Round your answers to the nearest dollar. Enter loans outstanding with minus sign.

July	$
august	$
september	$
october	$
november	$
december	$