Exercise 1.

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 30 days’ credit and the average selling price is $12. Tony is client, is given a 5% discount for paying cash when the sale is made. Tony buy 150 in January, 220 in February. The sales to Tony are in addition to those credit sales stated above.

Purchases (an average of 60 days credit) are $4.5 per evo. Tom plans to buy in a month in advance of selling them. Total overheads are $500 per month, depreciation: $400 and salary is $1,000. All other overheads are paid for after a credit period of 30 days.

Required: prepare a monthly cash flow forecast for the 1st quarter of 20X2, the opening balance is $3,500.