Allan International Is in the Construction Business Prepare a Cash Budget and Determine the Projected Ending Cash

question 51

Essay

Allan International is in the construction business.In 2010,it is expected that 30 percent of a month's sales will be received in cash,with the balance being received the following month.Of the purchases,60 percent are paid the following month,30 percent are paid in two months,and the remaining 10 percent are paid during the month of purchase.
The sales force receives $2,000 a month base pay plus a 4 percent commission.Labor expenses are expected to be $6,000 a month.Other operating expenses are expected to run about $5,000 a month,including $1,000 for depreciation.
The ending cash balance for 2009 was $28,000.
$$\begin{array} { | c r r | } \hline & \text { Sales } & \text { Purchases } \\\hline \text { 2009-Actual } & & \\\text { November } & \$ 140,000 & \$ 80,000 \\\text { December } & 160,000 & 100,000 \\& & \\2010 - \text { Budgeted } & & \\\text { January } & \$ 90,000 & \$ 90,000 \\\text { February } & 80,000 & 100,000 \\\text { March } & 100,000 & 80,000 \\\hline\end{array}$$

Prepare a cash budget and determine the projected ending cash balances for the first three months of 2010.

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Definitions:

Apraxia

A neurological disorder characterized by the loss of the ability to execute or carry out learned purposeful movements, despite having the desire and physical ability to perform the movements.

Agnosia

A neurological disorder characterized by the inability to recognize and process sensory information, typically despite normal sensory function.

Aphasia

A neurological condition characterized by the impairment of language abilities, affecting speaking, understanding, reading, and writing, often due to brain damage.

Occipital Cortex

The region of the cerebral cortex at the back of the brain, primarily involved in processing visual information.