Pascal starts a furniture making business. Budgeted sales and purchases for the first six months of his business are:
|
Jan |
Feb |
Mar |
Apr |
May |
Jun |
|
|
$ |
$ |
$ |
$ |
$ |
$ |
|
|
Sales |
5,000 |
6,000 |
6,500 |
7,000 |
6,000 |
7,000 |
|
Purchases |
4,000 |
6,000 |
4,000 |
4,000 |
3,500 |
4,000 |
- Pascal anticipates that 50 per cent of his sales will be for cash and 50 per cent on credit terms of one month.
- Inventory will be kept very low and bought in the month it is sold. Inventory is paid for with cash as it is bought.
- Workshop rent is $1,200 per month, paid on the first day of each month.
- Pascal has a van. This costs $400 per month. Pascal pays all van costs in cash.
- Pascal starts the business with an opening bank balance of $5,000.
Required:
Prepare a cash budget for the first six months of Pascal’s business.