Floribama Clothing has generated $130,000 in sales during the past few months, and it is expected that this level of sales will continue for the next year. Based on past experience, 40 percent of the sales will be collected in the month of the sale, and these customers will take the 3 percent cash discount that is offered for early payment. The remaining 60 percent of the sales will be collected one month after the sale. Flobrimama normally purchases and pays for raw materials, which cost 70 percent of the sales prices, in the same month the finished goods are sold. Employee's wages represent 15 percent of the sales prices, and monthly rent is $15,000. The company currently has no cash, but its target cash balance is $6,000. Construct Floribama's cash budget for the next three months.

Question

Yurem Mora

Business

19 February, 02:56

Floribama Clothing has generated $130,000 in sales during the past few months, and it is expected that this level of sales will continue for the next year. Based on past experience, 40 percent of the sales will be collected in the month of the sale, and these customers will take the 3 percent cash discount that is offered for early payment. The remaining 60 percent of the sales will be collected one month after the sale. Flobrimama normally purchases and pays for raw materials, which cost 70 percent of the sales prices, in the same month the finished goods are sold. Employee's wages represent 15 percent of the sales prices, and monthly rent is $15,000. The company currently has no cash, but its target cash balance is $6,000. Construct Floribama's cash budget for the next three months.

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Answers (1)

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Konner Stevens · Answer 1

Explanation

Month.

1. 2. 3

Infows

Bal b/f. (60,060) (42,120)

Sales 50,440. 78000

Sales 50,440. 78,000

Sales. 50440

Outflows

Purchases 91000 91,000. 91,000

Wages. 19500. 19500. 19500

Bal c/d. (60,060) (42,120) (24180)