Allan International Is in the Construction Business

question 83

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

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Definitions:

Actuated

Refers to a mechanism or device being put into action or moved by a control signal, often used in machinery and automatic processes.

Pneumatically

Referring to the use of air pressure or compressed air to power tools, machines, or systems.

Combination Wrench

A wrench with an open end on one side and box end on the other, both of the same nominal dimension.

Open-End Jaws

A feature in tools, such as wrenches, designed to grip onto nuts or bolts from the side, enabling usability in tight spaces.