AMADEUS SUPERMARKET

Instructions: read the Amadeus Supermarket information

You were asked by your cousin to help him prepare a cash budget for his family business,
Amadeus Supermarket. In order to build the budget, he gave you the following
information.

1. The supermarket sales are 80% in cash, 20% in credit. You assume that credit
accounts are all collected within 30 days from sale in the following month. For
example, the accounts receivables of March are the result of the credit sale for
February (20% of $40,000).

2. Amadeus Supermarket treats cash discounts on purchases in the income

statement as other income.

3. Amadeus operating costs: Salaries are 18% of monthly sales, rent 7%, and other
operating costs (excluding depreciation) 5%. Assume that these costs are paid
each month. Depreciation is $1,500 per month.

4. Purchases are 70% of next months sales. A 2% discount is available if the

payment is made within three days after purchase, and the supermarket policy is
to take advantage of this discount.

5. In March, $1,000 is spent for equipment and additional $800 is to be spent in

April.

6. A minimum cash balance of $6,000 must be maintained. You assume that

borrowing is effective at the beginning of the month and all repayments are made
at the end of the month of repayment. Loans are repaid at the end of the quarter,
and the interest rate is repaid at the same time. The interest rate is 12% per year.

2015 Escuela Bancaria y Comercial