Question

The following data are from the budget of Ritewell Publishers. Half the company’s sales are transacted on a cash basis. The other half are paid for with a 1-month delay. The company pays all of its credit purchases with a 1-month delay. Credit purchases in January were $40, and total sales in January were $190.

	February				March				April
Total sales	$	220			$	240			$	200
Cash purchases		75				85				65
Credit purchases		45				35				45
Labor and administrative purchases		35				35				35
Taxes, interest, and dividends		15				15				15
Capital expenditures		110				0				0

Complete the following cash budget. (Leave no cells blank. Enter '0' when necessary. Negative amounts should be indicated by a minus sign.)

		February	March	April
Sources of cash
Collections on current sales
Collections on amounts receivable
Total sources of cash		$0	$0	$0
Uses of cash
Payments of accounts payable
Cash purchases
Labor and administrative expenses
Capital expenditures
Taxes, interest, and dividends
Total uses of cash		$0	$0	$0
Net cash inflow
Cash at start of period		$110
+	Net cash inflow
=	Cash at end of period	$110	$0	$0
+	Minimum operating cash balance	$110
=	Cumulative short-term financing required	$0	$0	$0

Answer 1

		February	March	April
Sources of cash
Collections on current sales		110	120	100
Collections on amounts receivable		95	110	120
Total sources of cash		$205	$230	$220
Uses of cash
Payments of accounts payable		40	45	35
Cash purchases		75	85	65
Labor and administrative expenses		35	35	35
Capital expenditures		110	0	0
Taxes, interest, and dividends		15	15	15
Total uses of cash		$275	$180	$150
Net cash inflow
Cash at start of period		$110	$40	$90
+	Net cash inflow	($70)	$50	$70
=	Cash at end of period	$40	$90	$160
+	Minimum operating cash balance	$110	$110	$110
=	Cumulative short-term financing required	$70	$20	$0