DATA:

Sales:
Credit 75%
Cash 25%

Collection of credit sales:

Current 31- 60 days 61 - 90 days 91 - 120 days

0% 60% 30% 10%

Sales (actual and estimated):

October 20X1 $300,000 March 20X2 $200,000

November 20X1 350,000 April 20X2 300,000
December 20X1 400,000 May 20X2 250,000
January 20X2 150,000 June 20X2 200,000
February 20X2 200,000 July 20X2 300,000

Payments for purchases of merchandise

as a percentage of the following month's sales: 80%

Wages and salaries:

January $30,000 April $50,000

February 40,000 May 40,000
March 50,000 June 35,000

Rent per month: $2,000

Interest expense (last day each quarter): $7,500

Tax payment April, 20X2 $50,000

Capital investment planned June, 20X2 $30,000

Cash balance December 31, 20X1 $100,000

Minimum level for cash $100,000

Borrowing increment $5,000

Schedule of projected sales and collections
for January to June (in thousands)

NOV DEC JAN FEB MAR

Frame A: Sales

Credit sales, 75%

Cash sales, 25%

Total sales, 100%

Frame B: Cash collections

Cash sales, this month

60% of last month's

credit sales

30% of two-month old

credit sales

10% of three-month old

credit sales

Total cash receipts

APR MAY JUNE
Schedule of projected total cash disbursements
for January to June (in thousands)

JAN FEB MAR APR MAY

Cash payments for:

Purchases
Wages and salaries
Rent
Interest
Tax
Capital investment

Total cash
disbursements
JUNE
Schedule of projected net cash flows
and cash balances for January to June (in thousands)

JAN FEB MAR APR MAY

Beginning cash balance,

without additional
financing

Total cash receipts

Total cash disbursements

Net cash flow

Ending cash balance,

without additional financing

Borrowing (repayment)
required to maintain
minimum cash balance
of $100,000

Ending cash balance,

with additional financing
JUNE