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 $160, and total sales in January were $310.

	February				March				April
Total sales	$	460			$	480			$	440
Cash purchases		135				145				125
Credit purchases		105				95				105
Labor and administrative purchases		95				95				95
Taxes, interest, and dividends		75				75				75
Capital expenditures		230				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			$0	$0
Taxes, interest, and dividends
Total uses of cash		$0	$0	$0
Net cash inflow
Cash at start of period		$230
+	Net cash inflow
=	Cash at end of period	$230	$0	$0
+	Minimum operating cash balance	$230
=	Cumulative short-term financing required	$0	$0	$0

Answer 1

		February	March	April
Sources of cash
Collections on current sales		230	240	220
Collections on amounts receivable		155	230	240
Total sources of cash		$385	$470	$460
Uses of cash
Payments of accounts payable		160	105	95
Cash purchases		135	145	125
Labor and administrative expenses		95	95	95
Capital expenditures		230	0	0
Taxes, interest, and dividends		75	75	75
Total uses of cash		$695	$420	$390
Net cash inflow		($310)	$50	$70
Cash at start of period		$230	$230	$230
+	Net cash inflow	($310)	$50	$70
=	Cash at end of period	($80)	$280	$300
+	Minimum operating cash balance	$230	$230	$230
=	Cumulative short-term financing required	$310	$0	$0