Month aug sept oct nov dec jan

Sales volume 14,500 14,000 15,000 18,000 17,500 16,000

Unit selling price 14.5 16 16.5 17 17.5 17
Cash sales with 2.5% discount 35% 30% 35% 30% 35% 45%
Unit cost of sales 9.5 10.25 10.5 11.5 11.75 11
Sales Terms: 1/10, n/30
a. Records show that charged sales are normally collected as follows :
40% within 10 days from the date of sale, on the average; and,
the balance, collected within 30-45 days after the date of sale.
b. Merchandise for sale were normally purchased 15 days before the month of sale with supplier's payment term
payment term of 2/10, n/30. The company settles suppliers' account to avail the discount.
c. Operating expenses:
Variable - 17.5% of total sales revenue.
Fixed - P785,000 per annum, of which 22.5% represents non-cash items.
Third quarter Vat payable due on Oct. 25th amounted P16,200.
Third quarter income tax payable is P40,500 and will be due on Nov. 29th.
d. An existing P75,000 loan will be settled by November 15th, plus 12% p.a. interest covering 180 days.
e. By December 15th, P18,000 cash dividends less 10% final tax from Covidna Corp. is expected.
f. Required minimum cash balance must not go below 20% of next month Purchases.
g. By September 30th, cash available will amount to P32,300.
h. Funds are available in P20,000 multiple at 9%, p.a.; interest payable at month-end.
i. Proceeds from borrowing should come in at the start of the month while any repayment
thereof will have to be made at the end of month.

Month oct nov dec Total

Sales 232,500 288,000 288,750 809,250
Cash Receipts:
Cash sales with 2.5% discount 79,341 84,240 98,536 262,117
Collection of receivables - 10 days after sale 44,884 59,875 55,743 160,503
Collection of receivables - 30-45 days after sale 102,900 105,788 141,120 349,808
Cash Dividends 16,200 16,200
Total Cash In Flow 227,125 249,903 311,599 788,627

Cash Disbursements:
Payment for Merchandise Purchased 185,220 184,363 164,640 534,223
Payment for Variable Expenses 28,481 35,280 35,372 99,133
Payment for Fixed Expenses 49,050 49,050 49,050 147,150
Re-payment of Loan & Interest 79,438 79,438
Total Cash Out Flow 262,751 348,131 249,062 859,944

Net Cash Flow (35,627) (98,228) 62,537 (71,317)

Desired Cash Balance, End (35,000) (35,000) (35,000) (35,000)
Cash Balance, Beg. 32,300 41,180 39,700 32,500
Cash Excess (Shortage) (38,327) (92,048) 67,237 (73,817)
Borrowings Needed 16,200 40,500 140,000
Repayment - Loan Principal 75,000 (60,000) (60,000)
- Loan Interest (108) (9,000) (933) (10,041)
Cash Increment (22,235) 14,452 6,304 (3,859)
 Modified true or false
1.) materials purchases
2.) sales
3.) 1
4.) production budget
5.) 1
6.) decrease
7.) 1
8.) end of fiscal year
payment term 9.) 1
10.) 1
11.) planning
12.) 1
13.) 1
14.) sales volume
15.) 3