Mini-Case 13-2: The Laurens Corporation
In past years, Sue Salgado, owner of the Laurens Corporation, has been plagued by unexpected cash flow problems. Her banker, worried about her lack of cash flow management, has suggested that Sue create a cash budget for the upcoming quarter. Sue does this, using the following information:
October November December
Sales $800,000 $900,000 $950,000
Manufacturing Costs 475,000 520,000 575,000
Operating Expenses 250,000 270,000 290,000
Capital Expenditures 20,000 70,000 - 0 -
Laurens Corporation expects 35 percent of its sales to be in cash, 70 percent of the accounts receivable will be collected within the next month, and 25 percent in the second month after sale. Depreciation, insurance, and property taxes comprise $25,000 of monthly manufacturing costs and $12,000 of operating expenses. Insurance and property taxes are paid in February, June and September. One-half of the remaining manufacturing costs and operating expenses will be paid in the month in which incurred, and the rest in the following month. As of October 1ˢᵗ, the following facts are relevant:
∙ Current assets consist of $50,000 in cash, $50,000 in securities
∙ Credit sales for August and September were $500,000 and $450,000, respectively
∙ The firm has a line of credit with a local bank at 18 percent APR, and loan is due the following month
∙ Accounts payable of $200,000 for September manufacturing expenses
∙ Accrued liabilities of $100,000 for September operating expenses
∙ Dividends of $1,000 should be received in November
∙ An income tax payment of $20,000 will be made in November
∙ The firm's minimum cash balance is $10,000
-From the information given, prepare a monthly cash budget for the next quarter (October through December)for the Laurens Corporation.

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The Answer of Mini-Case 13-2: The Laurens Corporation
In past years, Sue Salgado, owner of the Laurens Corporation, has been plagued by unexpected cash flow problems. Her banker, worried about her lack of cash flow management, has suggested that Sue create a cash budget for the upcoming quarter. Sue does this, using the following information:
October November December
Sales $800,000 $900,000 $950,000
Manufacturing Costs 475,000 520,000 575,000
Operating Expenses 250,000 270,000 290,000
Capital Expenditures 20,000 70,000 - 0 -
Laurens Corporation expects 35 percent of its sales to be in cash, 70 percent of the accounts receivable will be collected within the next month, and 25 percent in the second month after sale. Depreciation, insurance, and property taxes comprise $25,000 of monthly manufacturing costs and $12,000 of operating expenses. Insurance and property taxes are paid in February, June and September. One-half of the remaining manufacturing costs and operating expenses will be paid in the month in which incurred, and the rest in the following month. As of October 1ˢᵗ, the following facts are relevant:
∙ Current assets consist of $50,000 in cash, $50,000 in securities
∙ Credit sales for August and September were $500,000 and $450,000, respectively
∙ The firm has a line of credit with a local bank at 18 percent APR, and loan is due the following month
∙ Accounts payable of $200,000 for September manufacturing expenses
∙ Accrued liabilities of $100,000 for September operating expenses
∙ Dividends of $1,000 should be received in November
∙ An income tax payment of $20,000 will be made in November
∙ The firm's minimum cash balance is $10,000
-From the information given, prepare a monthly cash budget for the next quarter (October through December)for the Laurens Corporation.

Mini-Case 13-2: the Laurens Corporation