Cash Budget LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: Cash balance on October 1 is $1,120. Actual sales for August and September are as follows: August September Cash sales $6,000 $4,500 Credit sales 57,000 61,000 Total sales $63,000 $65,500 Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month. Salaries and wages total $3,850 per month. Rent is $3,150 per month. Taxes to be paid in October are $1,635. LeeAnn usually withdraws $3,500 each month as her salary. Advertising is $1,500 per month. Other operating expenses total $3,800 per month. Internet and telephone fees are $320 per month. LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $64,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance. Required: Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate computations and final answers to the nearest dollar. Beginning cash balance $fill in the blank 7e5bce06d043015_1 Collections: Cash sales fill in the blank 7e5bce06d043015_2 Credit sales: October fill in the blank 7e5bce06d043015_3 September fill in the blank 7e5bce06d043015_4 August fill in the blank 7e5bce06d043015_5 Total cash available $fill in the blank 7e5bce06d043015_6 Disbursements: Inventory purchases: October $fill in the blank 7e5bce06d043015_7 September fill in the blank 7e5bce06d043015_8 Salaries and wages fill in the blank 7e5bce06d043015_9 Rent fill in the blank 7e5bce06d043015_10 Taxes fill in the blank 7e5bce06d043015_11 Other operating expenses fill in the blank 7e5bce06d043015_12 Owner withdrawal fill in the blank 7e5bce06d043015_13 Advertising fill in the blank 7e5bce06d043015_14 Internet and telephone fill in the blank 7e5bce06d043015_15 fill in the blank 7e5bce06d043015_16 Ending cash balance

Cash Budget LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: Cash balance on October 1 is $1,120. Actual sales for August and September are as follows: August September Cash sales $6,000 $4,500 Credit sales 57,000 61,000 Total sales $63,000 $65,500 Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month. Salaries and wages total $3,850 per month. Rent is $3,150 per month. Taxes to be paid in October are $1,635. LeeAnn usually withdraws $3,500 each month as her salary. Advertising is $1,500 per month. Other operating expenses total $3,800 per month. Internet and telephone fees are $320 per month. LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $64,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance. Required: Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate computations and final answers to the nearest dollar. Beginning cash balance $fill in the blank 7e5bce06d043015_1 Collections: Cash sales fill in the blank 7e5bce06d043015_2 Credit sales: October fill in the blank 7e5bce06d043015_3 September fill in the blank 7e5bce06d043015_4 August fill in the blank 7e5bce06d043015_5 Total cash available $fill in the blank 7e5bce06d043015_6 Disbursements: Inventory purchases: October $fill in the blank 7e5bce06d043015_7 September fill in the blank 7e5bce06d043015_8 Salaries and wages fill in the blank 7e5bce06d043015_9 Rent fill in the blank 7e5bce06d043015_10 Taxes fill in the blank 7e5bce06d043015_11 Other operating expenses fill in the blank 7e5bce06d043015_12 Owner withdrawal fill in the blank 7e5bce06d043015_13 Advertising fill in the blank 7e5bce06d043015_14 Internet and telephone fill in the blank 7e5bce06d043015_15 fill in the blank 7e5bce06d043015_16 Ending cash balance

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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Question

Cash Budget

LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following:

Cash balance on October 1 is $1,120.
Actual sales for August and September are as follows:

August September

Cash sales $6,000     $4,500

Credit sales 57,000     61,000

    Total sales $63,000     $65,500
Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible.
Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month.
Salaries and wages total $3,850 per month.
Rent is $3,150 per month.
Taxes to be paid in October are $1,635.
LeeAnn usually withdraws $3,500 each month as her salary.
Advertising is $1,500 per month.
Other operating expenses total $3,800 per month.
Internet and telephone fees are $320 per month.

LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $64,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance.

Required:

Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate computations and final answers to the nearest dollar.

Beginning cash balance	$fill in the blank 7e5bce06d043015_1
Collections:
Cash sales	fill in the blank 7e5bce06d043015_2
Credit sales:
October	fill in the blank 7e5bce06d043015_3
September	fill in the blank 7e5bce06d043015_4
August	fill in the blank 7e5bce06d043015_5
Total cash available		$fill in the blank 7e5bce06d043015_6
Disbursements:
Inventory purchases:
October	$fill in the blank 7e5bce06d043015_7
September	fill in the blank 7e5bce06d043015_8
Salaries and wages	fill in the blank 7e5bce06d043015_9
Rent	fill in the blank 7e5bce06d043015_10
Taxes	fill in the blank 7e5bce06d043015_11
Other operating expenses	fill in the blank 7e5bce06d043015_12
Owner withdrawal	fill in the blank 7e5bce06d043015_13
Advertising	fill in the blank 7e5bce06d043015_14
Internet and telephone	fill in the blank 7e5bce06d043015_15	fill in the blank 7e5bce06d043015_16
Ending cash balance

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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	August	September
Cash sales	$6,000	$4,500
Credit sales	57,000	61,000
Total sales	$63,000	$65,500