Tierney Enterprises Is Constructing Its Cash Budget

Tierney Enterprises is constructing its cash budget.Its budgeted monthly sales are $5,000, and they are constant from month to month.40% of its customers pay in the first month and take the 2% discount, while the remaining 60% pay in the month following the sale and do not receive a discount.The firm has no bad debts.Purchases for next month's sales are constant at 50% of projected sales for the next month."Other payments," which include wages, rent, and taxes, are 25% of sales for the current month.Construct a cash budget for a typical month and calculate the average net cash flow during the month.

A) $1,092
B) $1,150
C) $1,210
D) $1,271
E) $1,334

Correct Answer:

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