love58
Mar 14, 2010, 10:34 AM
Gumby Glass Company 2009 Cash Budget Assumptions
To review the preparation of a cash budget, we will work with the following facts and assumptions, and prepare Gumbys' cash budget for the first six months of 2009.
1. To increase sales, Gumby is pursuing expanded sales via an increase in adverstising in a new region, supported by a new salesperson for that region. The adversting will begin in January at a cost of $60,000 for the year. The salesperson's base salary is $30,000 and a $.01 commission per bottle sold. The salary begins in January.
2. With plans for the new region, sales are expected to increase 8 percent beginning in March. The related sales commission will begin to be paid in February as new orders are received.
3. Cash is collected on sales based on the general flow of 50 percent in the month of sale and 50 percent in the subsequent month.
4. The $100,000 of debts is due is to be paid in March, with a corresponding drop in interest expense.
5. The taxes due for 2008 will be paid in full in March.
6. Gumby has available a $200,000 line of credit with an interest rate of 12 percent
To review the preparation of a cash budget, we will work with the following facts and assumptions, and prepare Gumbys' cash budget for the first six months of 2009.
1. To increase sales, Gumby is pursuing expanded sales via an increase in adverstising in a new region, supported by a new salesperson for that region. The adversting will begin in January at a cost of $60,000 for the year. The salesperson's base salary is $30,000 and a $.01 commission per bottle sold. The salary begins in January.
2. With plans for the new region, sales are expected to increase 8 percent beginning in March. The related sales commission will begin to be paid in February as new orders are received.
3. Cash is collected on sales based on the general flow of 50 percent in the month of sale and 50 percent in the subsequent month.
4. The $100,000 of debts is due is to be paid in March, with a corresponding drop in interest expense.
5. The taxes due for 2008 will be paid in full in March.
6. Gumby has available a $200,000 line of credit with an interest rate of 12 percent