Example 2

Tom is a agency of motorcycle Evo, it is 1 January 20X2. Credit sales in the last quarter of 20X1 were as follows:
His credit sales in the first quarter of 20X2 will be as follows:
Customers are given 60 days’ credit and the average selling price is $12. Tony is client, is given a 2% discount for paying cash when the sale is made. Tony buy 100 in January, 200 in February. The sales to Tony are in addition to those credit sales stated above.
Purchases (an average of 30 days credit) are $5 per evo. Tom plans to buy in a month in advance of selling them. Total overheads are $2,000 per month, this includes salary of $1,000. All other overheads are paid for after a credit period of 30 days.
Tom plans to inject a further $1,000 of his own money into the business in March to help to buy non-current assets for $10,000.
Required: prepare a monthly cash flow forecast for the 1st quarter of 20X2, the opening balance is $2,500.