A-plus writer – cash management and budgeting
The new owner of Bob’s Boats, Bob, just purchased the business and discovered that the prior owner did not have a plan for managing the current assets of the company. Bob has decided that the place to start is with a cash budget, using the template he used in his prior position.
Bob has requested that you to complete the cash budget given the data that he has already retrieved from the company’s records and from his own analysis.
Table-1:
| Sales Forecast for the next 9 Months | ||
|
Month |
Sales |
|
|
January |
$ 162,000.00 |
|
|
February |
$ 168,000.00 |
|
|
March |
$ 324,000.00 |
|
|
April |
$ 485,000.00 |
|
|
May |
$ 648,000.00 |
|
|
June |
$ 325,000.00 |
|
|
July |
$ 325,000.00 |
|
|
August |
$ 80,000.00 |
|
|
September |
$ 162,000.00 |
|
Collections on receivables have historically been collected as follows and this pattern is expected to continue:
- 12% in the Month of Sale
- 60% in the month following the Sale
- 28% in the Second Month after the Sale
Bob pays for the labor and materials in the month after they are incurred. Bob has also compiled the following information on expenses for the upcoming nine month period:
Table-2:
| Month |
Labor and Materials Expense |
Administrative Salaries |
Depreciation Charges |
Income Taxes |
Lease Payments |
Miscellaneous Expenses |
|
January |
$ 80,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
February |
$ 80,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
March |
$ 114,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
April |
$ 794,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
May |
$ 275,000.00 |
$ 25,000.00 |
$ 34,500.00 |
$ 58,500.00 |
$ 8,500.00 |
$ 3,000.00 |
|
June |
$ 210,500.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
July |
$ 146,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
|
August |
$ 80,000.00 |
$ 25,000.00 |
$ 34,500.00 |
$ 58,500.00 |
$ 8,500.00 |
$ 3,000.00 |
|
September |
$ 81,000.00 |
$ 25,000.00 |
$ 34,500.00 |
– |
$ 8,500.00 |
$ 3,000.00 |
Bob has also identified a cash payment of $175,000 upon completion of a new boat dock in July. As of March 1st, the company now has $125,000 in cash on hand and would like to maintain a minimum cash balance of $85,000 at all times.
Required:
- Prepare a Schedule of Collections and Payments for the six month period beginning in March, using the template provided and the data above.
- Prepare a Schedule of Cash Gains and Losses by month for the six month period beginning in March, using the template provided and the data above.
- Prepare a Schedule of Cash Surplus or Shortages by month for the six month period beginning in March, using the template provided and the data above.
- Prepare a schedule of Net Cash Flow by month for the six month period beginning in March, using the template provided and the data above indicating the timing and amounts that must be borrowed or the amounts that can be re-invested or used in the firm.
- Based on the information in the reports you constructed above would you recommend any changes in the credit policy of the firm? If so, what would they be? Explain your answers.
| Assignment 1 Grading Criteria |
Maximum Points |
| Correctly constructed a Schedule of Collections and Payments for the company during the period indicated. |
48 |
| Correctly constructed a Schedule of Cash Gains and Shortages for the company during the period indicated. |
48 |
| Correctly constructed a Schedule of Cash Surplus or Shortages for the company during the period indicated. |
48 |
| Correctly constructed a Schedule of Net Cash Flow for the company during the period indicated. |
48 |
| Correctly summarized the findings and identified any needed changes to the credit policy of the firm. |
44 |
| Written Components: Organization (12) usage and mechanics (12) APA elements (16) Style (4) |
64 |
| Total: |
300
|
Other Blog Posts
What are the key elements of an essay
You may clearly understand what an essay is and have had the experience of writing a number. However, it is […]
Feb 25th, 2022
How to write a research paper fast
The day inevitably comes; you need to submit your assignment. You have been procrastinating on writing your paper until the […]
Feb 24th, 2022
220+ best humanities research paper topics
Choosing a paper topic can be a daunting task for any assignment. A student may face agony trying to come […]
Feb 24th, 2022
How to write a media analysis essay
The media is an integral part of modern society. Think of what would happen to the world if there were […]
Feb 23rd, 2022
Great tricks on how to write a hypothesis in 2022
A hypothesis is a statement that can be proven by scientific research. It proves the theory of action and reaction, […]
Feb 22nd, 2022
Math is not difficult. However, it is complex and tough compared to other subjects and requires a little bit more […]
Feb 22nd, 2022