1.Create an excel with a budgeted income statement for each of the first two months
2.prepare a cash flow analysis for the two month period
3. Compute what the accounts receivable and accounts payable balances will be at the end of the two month period.
At the start if business operation is $10,000
On the first day of the first month of business, an insurance premium of $6,000 is due. The term of this policy is for one year.
The owner provides the following estimates for the first two months of business:
Sales:$40,000 in first month, and $60,000in second month.
Cost of sales: 35%
Cost of labor: 30%
Cost of related payroll(payroll taxes, benefits):25% of payroll
Supplies:5% of sales
Advertising: $600 monthly
Depreciation: $1,000 monthly
Rent: $3,000 monthly
All other expenses: 12% of sales
The owner provides the following statistical information bases on industry studies and personal estimates:
Sales are estimated to be 80% cash and 20% accounts receivable. The accounts receivable are collected in the month following the sales
Cost of sales represent purchases. The purchase are estimated to be 90% on accounts payable and 10 percent cash. The accounts payable are paid In the month following the sale
All other expenses are paid in the current month
A delivery truck is required for the second month of business. This vehicle will cost $25,000 and requires a $4,000 down payment. Payments on the note start the third month of business.