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00 in cash and $4,000 in loans payable. A minimum cas th when the preliminary cash balance is below $12,000 and is paid at each month-end. If a preliminary cash bal Expenses are paid in the month incurred and include s O per month), and rent ($5,000 per month).

00 in cash and $4,000 in loans payable. A minimum cas th when the preliminary cash balance is below $12,000 and is paid at each month-end. If a preliminary cash bal Expenses are paid in the month incurred and include s O per month), and rent ($5,000 per month).

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 72P: Cash Budget The controller of Feinberg Company is gathering data to prepare the cash budget for...
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Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next three months follow. April $ 30,000 June Budgeted Sales Cash payments for merchandise purchases May $ 42,000 $ 26,000 24,200 14,800 13,500 Sales are 80% cash and 20% on credit. Sales in March were $26,000. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $14,000 in cash and $4,000 in loans payable. A minimum cash balance of $14,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $12,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $12,000 at month-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (4% of sales), office salaries ($7,000 per month), and rent ($5,000 per month). (a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Answer is not complete.
Transcribed Image Text:Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next three months follow. April $ 30,000 June Budgeted Sales Cash payments for merchandise purchases May $ 42,000 $ 26,000 24,200 14,800 13,500 Sales are 80% cash and 20% on credit. Sales in March were $26,000. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $14,000 in cash and $4,000 in loans payable. A minimum cash balance of $14,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $12,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $12,000 at month-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (4% of sales), office salaries ($7,000 per month), and rent ($5,000 per month). (a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Answer is not complete.
CASTOR INCORPORATED Schedule of Cash Receipts from Sales May April June 30,000 42,000 2$ 26,000 Cash receipts from 8,400 8 s 24,000 8 6,000s 5,200 8 Cash sales Collections of prior period sales 14,000 33,600 Total cash receipts 20,000 32,400 38,800 CASTOR, INCORPORATED Cash Budget April May June Beginning cash balance 14,000 14,000 14,000 X Add: Cash receipts from sales 20,000 32,400 38,800 Total cash available 34,000 46,400 52,800 Less: Cash payments for: Merchandise 24,200 14,800 13,500 Sales commissions 3,000 4,200 2,600 Shipping 1,200 1,680 1,040 Rent 5,000 O 5,000 O 5,000 7,000 O 7,000 7,000 140 Office salaries Interest on loan 40 Total cash payments 40,440 32,820 29,140 Preliminary cash balance Additional loan (loan repayment) 13,580 8 420 9 (6,440) 8 23,660 X 7,560 Ending cash balance 14,000 14,000 23,660 Loan balance April May June Loan balance - Beginning of month 4,000 11,560 Additional loan (loan repayment) 7,560 3 420 Loan balance - End of month 11,560 8 %24
Transcribed Image Text:CASTOR INCORPORATED Schedule of Cash Receipts from Sales May April June 30,000 42,000 2$ 26,000 Cash receipts from 8,400 8 s 24,000 8 6,000s 5,200 8 Cash sales Collections of prior period sales 14,000 33,600 Total cash receipts 20,000 32,400 38,800 CASTOR, INCORPORATED Cash Budget April May June Beginning cash balance 14,000 14,000 14,000 X Add: Cash receipts from sales 20,000 32,400 38,800 Total cash available 34,000 46,400 52,800 Less: Cash payments for: Merchandise 24,200 14,800 13,500 Sales commissions 3,000 4,200 2,600 Shipping 1,200 1,680 1,040 Rent 5,000 O 5,000 O 5,000 7,000 O 7,000 7,000 140 Office salaries Interest on loan 40 Total cash payments 40,440 32,820 29,140 Preliminary cash balance Additional loan (loan repayment) 13,580 8 420 9 (6,440) 8 23,660 X 7,560 Ending cash balance 14,000 14,000 23,660 Loan balance April May June Loan balance - Beginning of month 4,000 11,560 Additional loan (loan repayment) 7,560 3 420 Loan balance - End of month 11,560 8 %24
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