The ZYX Corporation is planning to request a line of credit from its bank and wants to estimate its cash needs for the month of September. The following sales forecasts have been made for 2014:

July $500,000
August $400,000
September $300,000
October $200,000
November $100,000

Collection estimates were obtained from the credit collection department as follows: 20% collected within the month of sale; 70% collected the first month following the sale; and 10% collected the second month following the sale. Payments for labor and raw materials are typically made in the month in which these costs are incurred. Total labor and raw material costs each month are 50% of sales. General administrative expenses are $30,000 per month, lease payments are $10,000 per month, and depreciation charges are $20,000 per month. The corporation tax rate is 40%; however, no corporate taxes are paid in September. Prepare a cash budget for September.

Answer:
ZYX Corporation
Pro Forma Income Statement
September 2015
Sales $300,000
Total cost of goods sold 150,000
Gross profit $150,000
Depreciation 20,000
General administrative expenses 30,000
Lease payments 10,000
Operating income $90,000
Taxes 36,000
Net income $54,000

ZYX Corporation
Cash Budget
September 2005
Cash Inflows
Collections from September sales $60,000
Collections from August sales 280,000
Collections from July sales 50,000
Total cash inflows $390,000
Cash Outflows
Labor and raw materials $150,000
General administrative expenses 30,000
Lease payments 10,000
Total cash outflow $190,000
Net cash inflow $200,000