Filipinas Industries Inc.

Mabelle m. senarillos mba-1 financial management

Assignment no. 4

Preparing a Cash Receipt Budget

Kite Products makes 35 percent of its sales for cash, collects 40 percent of its sales the following month, and the final 25 percent the next month.

The sales figures in Kite Products for the past year:

January | P120,000 | July | P660,000 |

February | P150,000 | August | P520,000 |

March | P200,000 | September | P380,000 |

April | P400,000 | October | P210,000 |

May | P500,000 | November | P100,000 |

June | P460,000 | December | P50,000 |

Additional Information:

* Show the cash inflows generated by the sales presented above.

* In planning for next year, the company expects sales to be 8 percent above last year’s level.

* Calculate the forecasted sales on a month-by-month basis for the next year.

* If Kite Products collects 5 percent of its sales in cash, 15 percent the following month; and the final 80 percent the next month, calculate the company’s projected cash receipts for the next year.

Required: Prepare a cash receipt budget for Kite Products.

A. Cash Receipt Budget for the past year | | | | | | | | |

| | | | | | | | | | | | |

Month | JANUARY | FEBRUARY | MARCH | APRIL | MAY | JUNE | JULY | AUGUST | SEPTEMBER | OCTOBER | NOVEMBER | DECEMBER |

Sales | 120,000 | 150,000 | 200,000 | 400,000 | 500,000 | 460,000 | 660,000 | 520,000 | 380,000 | 210,000 | 100,000 | 50,000 |

Cash sales | 42000 | 52500 | 70000 | 140000 | 175000 | 161000 | 231000 | 182000 | 133000 | 73500 | 35000 | 17500 |

Collection of receivables |   |   |   |   |   |   |   |   |   |   |   |   |

One month |   | 48000 | 60000 | 80000 | 160000 | 200000 | 184000 | 264000 | 208000 | 152000 | 84000 | 40000 |

Two Month |   |   | 30000 | 37500 | 50000 | 100000 | 125000 | 115000 | 165000 | 130000 | 95000 | 52500 |

TOTAL | 42000 | 100500 | 160000 | 257500 | 385000 | 461000 | 540000 | 561000 | 506000 | 355500 | 214000 | 110000 |

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