INFORMATION AND DATA BASES FOR THE PROJECTIONS AND CONFORMATION OF THE BUDGETS

EMPRESAS SOTOMAYOR lists below historical financial data, basis for projections and required budget forecasts.

SALES PER MONTH DURING THE PAST YEAR 20X1
JANUARY $550,000 FEBRUARY $825,000 MARCH $575,000
APRIL $870,000 MAY $1,080,000 JUNE $1,065,000
JULY $1,070,000 AUGUST $1,060,000 SEPTEMBER $1,180,000
OCTOBER $1,140,000 NOVEMBER $1,290,000 DECEMBER $1,460,000

I. Projection of cash flow to conform and structure the Cash Budget. 20X2

The basis for making this budget are the calculated results in terms of receipts and disbursements for purchases, expenses and debts from previous budgets; plus the information below.

? Beginning Cash Balance - Cash is $50,000
? Minimum monthly cash balance in the budget period is $100,000.
? Stockholders are requesting dividends of $150,000 in the months of March, June, September and December.
o Such dividends will be granted as long as the company does not have to borrow or finance them with debt. There has to be cash to grant it. Payments of less than $150,000 are not applicable.
? Operational deficiencies and the desired minimum cash balance, in the projected months, may be financed by short-term debts.

REQUIRED: PREPARE THE FOLLOWING BUDGETS FOR 20X2:

1. Budget of Sales and Collections. Section I. (Remember that the business existed last year 20X1. Therefore, sales for the last months of 20X1 are projected to be collected in the 20X2 period. Not including such collections will significantly affect all calculations in the 20X2 budgets) .
2. Purchase Budget and purchase payments - Section II.
3. Budget of payments for expenses and amortization of debts. Section III.
4. CASH BUDGET Section IV, with effect of the previous ones.
• All budgets are prepared for a full year divided into months.
• I recommend using the total column, after the last month of the budget period for balancing purposes.

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