Reference no: EM132698850

Problem - Vertical Ladder Company (VLC) forecasts that its sales for January through April will be $60,000, $70,000, $90,000, and $80,000, respectively. All sales are made on credit, and past experience indicates that 30 percent of the sales will be collected in the month of the sale and that the remaining 70 percent will be collected the following month. Customers who pay in the month of the sale will take the 2 percent cash discount offered by VLC for paying early. VLC normally purchases and pays for raw materials, which cost 55 percent of the sales prices, one month prior to selling the finished products. Employees' wages represent 25 percent of the sales price, and rent is $3,000 per month. At the beginning of February, VLC expects to have $4,000 in cash, which is $1,000 greater than its target cash balance. Using the information provided, construct a cash budget for February and March.