Answer to Question #327995 in Finance for lily

Question

Cash budget: Basic Farmers Delight Corporation reported sales of $350,000 in June,

$380,000 in July, and $390,000 in August. The forecasts for September, October, and

November are $385,000, $418,000, and $429,000, respectively. The initial cash bal-

ance on September 1 is $150,000, and a minimum of $8,000 should be kept. Use the

given information to compile a cash budget for the months of September, October,

and November.

(1) Farmers Delight predicts that 5% of its sales will never be collected, 30% of its sales will be cash sales, and the remaining 65% will be collected in the following month.

(2) Farmers Delight receives other monthly income of $3,000.

(3) The actual or expected purchases are $150,000, $120,000, and $115,000 for the months of September to November, respectively, and 50% are paid in cash while the remainder is paid in the following month. The purchases for August

were $120,000.

(4) Monthly rent is $3,500 chargeable only in October and November.

Answer 1

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