Rosey’s Roses
Cash Budget Prior Year 1 2 3
Operating activities
Operating cash receipts
Product sales revenue 250,000 287,500 330,625 380,219
Collections in the year of sale 244,375 281,031 323,186
Collections in the year following sale 37,500 43,125 49,594
Cash payments for purchases 200,000 206,047 250,589 289,888
Expenses
Advertising expense 15,000 15,750 16,538 17,364
Investing activities
Equipment purchases (100,000) (2,000) (2,000)
Equipment sales 500 500 500
Cash from (to) investing activities (99,500) (1,500) (1,500)
Financing activities
Loan proceeds 80,000
Loan payments (10,360) (10,360) (10,360)
Assumptions
Prior year sales 250,000
Cost of expected sales 75%
Required ending inventory 20%
Beginning inventory 58,000
Interest expense 4,000