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The company predicts that 5 percent of its credit sales will never be collected, 35 percent of its sales will be collected in the month of the sale, and the remaining 60 percent will be collected in the following month. Credit purchases will be paid in the month following the purchase.

In March 2002, credit sales were $210,000, and credit purchases were $156,000. Using this information, complete the following cash budget:

April

June

Beginning cash balance Cash receipts Cash collections from credit sales Total cash available Cash disbursements Purchases

Wages, taxes, and expenses Interest

Equipment purchases Total cash disbursements Ending cash balance

$300,000

Ross et al.: Fundamentals of Corporate Finance, Sixth Edition, Alternate Edition

VII. Short-Term Financial Planning and Management

19. Short-Term Finance and Planning

© The McGraw-Hill Companies, 2002

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