Question

#50 Aigna Tech a rapidy growng estributor of electronic components, formdating its plans for 20ss Cerol Jones the fam's marketing director, has completed the following sales rebruary April 1s, 000 Phillip Smith, an accountant in the Planning and Budgeting Department, is responsible for preparing the cash flow projectsion. The following information will be used in preparing the cash flow projection. Alpha-Tech's excellent record in accountsarcevable collection is expected to c month after the sale, and the remaining 40 percent two months after The purchase of electronic components Is Alpha-Tech's largest expenditure, and each month's cost of goods sold is estimated to ье 30 percent of sales. Seventy percent of the parts are receved by Alpha-Tech one month prior to sale, and 30 percent are received during the month of sale Historically, 70 percent of accounts payable has been paid one month after receipt of the purchased components, and the remaining 30 percent has been paid two months billings are collected the - Hourly wages and fringe benefits, estimated to be &O percent of the current month's sales, are paid in the month incurred General and administralive expenses are projected to be $16,170,000 for the year. The breakdown of these expenses is presented in the following schedule. All cash expenditures are paid unformly throughout the year, except the property taxes, which are paid in four equal installments at the end of each quarter 20x5 Forecasted General and Adninistrati salaries and fringe benefits Pronotion Property taxes Insurance vtilities Depreciation Total $ 3,200 4,300 1,480 1, 680 1, 500 4, 010 $16,170 esant lin . based on the income of the pnor quarter. Alpha-Tech is each calendar quarter Tech's operating income for the first quarter of subject to an income-tax rate of 40 percent. Alpha $4,000,000. The Alpha-Tech company borrows amounts cash flow. The Alpha-Tech has no short-term debt as of April t 20x5 20x5 is projected to be company pays 100 percent of the estimated tax payment maintains a minimum cash balance of s515.000 If the cash balance is less than $515,000 at the end of eac necessary to maintain this balance All amounts borrowed are repald out of the subsequent positive balance is $515,000. Alpha-Tech pifech uses a calendar year for both financial reporting and tax purposes Freparecash budget for Alpha-Tech by month for the second quarter of 20x5. For simplicity, Ignore any ssociated with borrowing (Negative amounts should be indicated by a minus sign) nterest expense Cash Budget d Quarter of 205 Beginning balance March sales Aprl sales May sales Total cash available Accounts payable Property taxes Income taxes Total disbursements Cash balance Cash borrowed Cash repaid Ending balance . dietrihutor of electronic compo. Post a question payments are made at the beginning of each calendar quarter based on the income the frst quarter of the prior quarter. Aipha-Tech is of20x5 pro ected to be subject to an income-tax rate of 40 percent. Alpha-T $4,000,000 Alpha iphe-Tech maintains a minimum cash balance of $515,000. ir the cash balance is less than $515.000 at the end of each month, the e. Al amounts borrowed are repaid out of the subsequent positive cash flow. The projected Aperil1, 20x5, opening balance is $515,000. Alpha-Tech has no short-term debt as of April 1, 20 - Alpha-Tech uses a calendar year for both financial reporting and tax purposes Required: 1 Prepare a cash budget for Alpha-Tech by month for the second quarter of 20x5. For simplicity, gnore any a minus sign associated with borrowing. (Negative amounts should be indicated by Cash Budget For the Second Quarter of 20x February sales March sales April sales May sales Total receipts Total cash available Accounts payable Wages General and administrative9D S Property taxe2u2 Income taxes Cash balance Cash borrowed Cash repaid Ending balance

Answer 1

ALPHA-TECH Cash Budget For the Second Quarter of 20x5 76 April 515,000 May 515,00 1,611,000 June 79 80 81 82 83 84 85 86 87 Beginning balance Collections February sales March sales April sales May sales Total receipts Total cash available Disbursements Accounts payable Wages 30% of sales General and administrative Property taxes Income taxes Total disbursements Cash balance Cash borrowed Cash repaid Ending balan 3,200,000 4,200,000 2,800,000 5,700,000 3,800,000 4,200,000 8,000,000 9,611,000 7,400,000 7,915,000 8,500,000 9,015,000 89 90 91 92 93 94 95 96 97 2,494,500 2,929,5003,343,500 2,850,0003,150,000 3,600,000 890,000 370,000 890,000 890,000 1,600,000 7,834,500 80,500 434,500 6,969,500 2,045,5001,407,500 8,203,500 (434,500) 1,611,000 ce 515,000 1,407,500

Supporting Calculations 01 Accounts Payable -Parts received; 03 Cost of Goods sold 05 06 May 30% of Sales 2,400,000 2,100,000 2,100,000 2,850,000 2,850,000 3,150,000 3,150,000 3,600,000 Month Timing March April June uary 720,000 07 March March 70% 1,470,000 08 09 10 630,000 1,995,000 855,000 2,205,000 May 12 13 945,000 2,520,000 3,465,000 2,190,000 2,625,000 3,060,000 15 16 17 18 19 Payments February March March 2,190,000 2,625,000 2,625,000 3,060,000 3,060,000 3,465,000 657,000 1,837,500 787,500 2,142,000 21 May Total Payments 918,000 2,425,500 3,343,500 23 2,494,500 2,929,500