cant seem to figure it out 461173

Kelly’s boutique is contemplating several means of financing their acquisition of \$100,000 in special equipment. One alternative is to borrow \$100,000 from a local bank for 10 years at 12 percent per annum. The bank has asked them to produce a 1-year cash budget broken down by months(January through December). Sales of \$30,000 are expected in the first month, with each month thereafter increasing 2 percent. Purchases are based on an expected cost of sales of 55 percent and a required ending inventory of 70 percent of next month’s sales. Beginning inventory was \$11,000. Sales for January next year are expected to be \$40,000. Sales in the previous November and December were \$29,000 and \$28,000, respectively. Expenses include advertising expense of \$900, depreciation expense of \$800, interest expense of \$1,000, payroll expense of \$8,000, supplies expense of \$500, and utilities expense of \$600 per month throughout the year. All expenses except depreciation are paid in the month during which they are incurred. Collections in the month of sale are expected to be 50 percent, collection in the first month following a sale 40 percent, and in the second month 10 percent. Payments in the month of purchase are expected to be 75 percent, payments in the first month following a purchase 15 percent, and payment in the second month to be 10 percent. Purchases in the previous November and December were \$16,000 and \$17,000, respectively. Proceeds from the \$100,000 loan are expected in June, and \$100,000 of equipment will be purchased in July. Monthly payments of \$1,400 on the loan also begin in July. The beginning cash balance in January was \$22,000.

Using the Ch6-04 file to start your work, create a cash budget that is based on the assumptions listed in the previous paragraph. Use excels grouping feature to group operating cash receipts, operating cash payment, cash from (to) operating activities, cash from (to) investing activities, and cash from (to) financing activities and also to group the twelve monthly columns together.

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