Accounting Bluepanda Inc. sales electronics parts, which finds application in various equipment used mainly in construction industry. The company has faced some issues in managing its working capital and has lost some key suppliers in the recent past due to mismanagement of cash and delay in vendor payments. Bluepanda has hired you as a financial consultant to look into this matter and provide a comprehensive perspective. The management also desired to maintain a cash balance of more than $15,000 each month as financial prudence. After considering all the information provided to you, you decided that having a cash budget would be the first step to understand the shortfall/surplus of cash and will aid in working capital management. You arranged a meeting with the marketing team and gathered the following information: Sales Forecast Month- year Sales Nov. 2022 $50,000 Dec 2022 $60,000 Jan 2023 $60,000 Feb 2023 $70,000 March 2023 $75,000 April 2023 $80,000 The accounts management team provided the following information: 80% of revenue is on a cash basis. 20% is collected after 30 days. Cost of sales, which is 50% of revenue, is incurred in the month in which the sales are made. These goods are paid for 30 (1 month) days after the purchases are made. Monthly selling and administrative expenses are as follows: Wages $12,000 Financing Cost $2,500 Rental Cost $800 Depreciation $3,000 Communication and Promotion expense $1,000 Provision for future losses $2,000 Other budgeted expenses are as follows: Taxes: $10,000 in February, $10,000 in April, and $10,000 in September Purchase of assets: $3,000 in January, $12,000 in February, $20,000 in March, and $3,000 in April Cash balance on January 1, 2023, is $3,000 Prepare a cash budget for the month of January 2022

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 3TP: Consider the dilemma you might someday face if you are the chief financial officer of a company that...

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Accounting

Bluepanda Inc. sales electronics parts, which finds application in various equipment used mainly in construction industry. The company has faced some issues in managing its working capital and has lost some key suppliers in the recent past due to mismanagement of cash and delay in vendor payments. Bluepanda has hired you as a financial consultant to look into this matter and provide a comprehensive perspective. The management also desired to maintain a cash balance of more than $15,000 each month as financial prudence.

After considering all the information provided to you, you decided that having a cash budget would be the first step to understand the shortfall/surplus of cash and will aid in working capital management. You arranged a meeting with the marketing team and gathered the following information:

Sales Forecast

Month- year	Sales
Nov. 2022	$50,000
Dec 2022	$60,000
Jan 2023	$60,000
Feb 2023	$70,000
March 2023	$75,000
April 2023	$80,000

The accounts management team provided the following information:

80% of revenue is on a cash basis.
20% is collected after 30 days.
Cost of sales, which is 50% of revenue, is incurred in the month in which the sales are made.
These goods are paid for 30 (1 month) days after the purchases are made.

Monthly selling and administrative expenses are as follows:

Wages	$12,000
Financing Cost	$2,500
Rental Cost	$800
Depreciation	$3,000
Communication and Promotion expense	$1,000
Provision for future losses	$2,000

Other budgeted expenses are as follows:

Taxes: $10,000 in February, $10,000 in April, and $10,000 in September
Purchase of assets: $3,000 in January, $12,000 in February, $20,000 in March, and $3,000 in April
Cash balance on January 1, 2023, is $3,000

Prepare a cash budget for the month of January 2022

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