nsu fin5130 mini case 2 latest 2017 october

Mini case 2 This assignment will require you to prepare the cash budget and determine the cash surplus and shortage each month. The management estimates total sales for the period January through June based on actual sales from the immediate past six months. The following assumptions are made: Historical Sales Forecasted Sales July 2016 $ 100 000 January 2017 $ 110 000 August 2016 $ 125 000 February 2017 $ 90 000 September 2016 $ 105 000 March 2017 $ 120 000 October 2016 $ 155 000 April 2017 $ 80 000 November 2016 $ 60 000 May 2017 $ 70 000 December 2016 $ 70 000 June 2017 $ 60 000 a. 50% of the Sales are collected immediately. 30% of the Sales will be collected one month after the sale. 10% will be collected two months after the sale. 6% will be collected three months after the sale. The remainder will be collected four months after the sale. Bad debts are insignificant. b. Purchases were $50 000 in July 2016 and are expected to grow by 2% each month. The purchases will be paid in the same month. c. Wages and salaries of $30 000 will be paid each month. d. Depreciation expenses are $20 000 each month. e. Rent of $15 000 will be paid at the end of each calendar quarter. f. Machinery worth $150 000 will be purchased in March. Prepare the cash budget from January to June. Determine the cash surplus and shortages for each month from January to June. Provide your analysis.