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Felasco Nurseries Inc_Cash Budget




Question;Basic;Cash Budget;P 3.;Felasco Nurseries Inc. has been in business for six years and has four divisions.;Ethan Poulis, the corporation?s controller, has been asked to prepare a cash;budget for the Southern Division for the first quarter. Projected data;supporting this budget follow.;Sales;(60% on credit) Purchases;November;$160,000;December;$;86,800;December;200,000;January;124,700;January;120,000;February;99,440;February;160,000;March;104,800;March;140,000;Collection;records of accounts receivable have shown that 30 percent of all credit sales;are collected in the month of sale, 60 percent in the month following the sale;and 8 percent in the second month following the sale, 2 percent of the sales;are uncollectible. All purchases are paid for in the month after the purchase.;Sala?ries and wages are projected to be $25,200 in January, $33,200 in;February, and $21,200 in March. Estimated monthly costs are utilities, $4,220;collection fees, $1,700, rent, $5,300, equipment depreciation, $5,440;supplies, $2,480, small tools, $3,140, and miscellaneous, $1,900.;Each;of the corporation's divisions maintains a $6,000 minimum cash bal?ance. As of;December 31, the Southern Division had a cash balance of $9,600.;Required;1. Prepare a monthly cash budget for Felasco;Nurseries' Southern Divisiontor the first quarter.;2.;Should Felasco Nurseries anticipate taking out a loan for the Southern;Divi?sion during the quarter? If so, how much should it borrow, and when?


Paper#38241 | Written in 18-Jul-2015

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