[jarene25]

A&B enterprises are currently creating estimates for the first quarter of the upcoming year. The following estimated data relates to A&B enterprises
1.Estimated cash balance on January 1st 20XX: $190,000
2.Estimated accounts receivable balance on January 1st 20XX: $185,000
3.Budgeted sales:

i. January: $540,000

ii. February: $620,000

iii. March: $485,000

4. A&B expects to sell 25% of its merchandise for cash.

5. A&B expects to collect 50% of its credit sales in the month of sale and the remainder in the next month.

6. Estimated accounts payable on January 1st 20XX: $90,000

7. Budgeted manufacturing costs:

i. January: $420,000

ii. February: $390,000

iii. March: $400,000

8. Depreciation expenses on plant and equipment are estimated at $16,000 per month and are included in the manufacturing costs.

9. The estimated accounts payable balance relates only to manufacturing costs. A&B expects to pay 65% of the manufacturing costs in the month in which these costs are incurred and the remaining amount will be paid in the following month.

10. A&B expects to purchase a photocopier in February 20XX: $60,000

11. Estimated income taxes to be paid in March 20XX: $80,000

12. Estimated rent revenue to be received in February 20XX: $16,000

13. Estimated interest expense to be paid in January 20XX: $14,000

14. Estimated selling and administrative expenses paid in the month incurred:

i. January: $70,000

ii. February: $80,000

iii. March: $65,000

15. A&B estimates that they will require a minimum cash balance of $300,000 at the end of each month.

16. Arrangements for a loan facility of $500,000 for the quarter have been made with the company’s bankers. Loans are accessed at the beginning of each month and repayments are made at the end of each month.

17. Interest on the loan is incurred at a rate of 15% per annum.



Required

Prepare the cash budget for A&B enterprises for the quarter ending March 31,20XX.
I am really unclear about the later part wrt the loan repayment.. and the interest payments.

[Curlyben]

What do YOU think ?
While we're happy to HELP we won't do all the work for you.
Show us what you have done and where you are having problems..

[jarene25]

January February March
Estimated cash receipts:
Cash sales 135,000 155,000 121,250
Collections 387,500 333,750 298,125
Interest revenue
Rent Revenue 16,000

Total Cash receipt 522,500 504,750 419,375

































































































































































Estimated cash payments for:
Manufacturing costs
Operating expenses
Photocopying machine
Capital expenditure
Repayment of Loan
Interest expense
Income Taxes


352,600
70,000



14,000


384,500
80,000
60,000




380,500
65,000




80,000
Total cash payments

Estimated Increase/Decrease cash
Estimated cash balance at the beginning of the month

Minimum cash balance required


190,000

300,000



300,000



300,000
Cash Surplus (deficit)

[jarene25]

Estimated cash payments for: JAN FEB MAR
Manufacturing costs 352,600 384,500 380,500
Operating expenses 70,000 80,000 65,000
Photocopying machine 60,000
Capital expenditure
Repayment of Loan
Interest expense 14,000
Income taxes 80,000



Sorry didn't come out as expected



Repayment of Loan
Interest expense
Income Taxes
Tal cash payments

[jarene25]

Photocopying is Feb 60,000
Interest expense Jan 14,000
Income tax Mar $80,000