Cash budget The following cash budget is for the third quarter of this year. Solve for the missing numbers on the cash budget, assuming that the accountant has requested a minimum cash balance of $9,800 at the start of each month. All borrowings, repayments, and investments are made in even $1,400 amounts. No borrowings or investments exist at the beginning of July. Beginning cash balance Cash receipts Total cash available Cash disbursements Payments on account Wages expense Overhead costs Total disbursements Cash excess (deficiency) Minimum cash balance Cash available (needed) $ Financing Borrowings (repayments) Acquire (sell) investments Receive (pay) interest Ending cash balance S S July $10.360 S 22.960 OS 0 14,000 11.200 $28.840 $ 0 (9.800) 0 $5.600 $ $10.080 S August September Total OS 28.280 0 $10.920 0 12.880 0 0 (9.800) S(12.320) S 0 OS OS 0 $57,400 $15.960 $ 17.360 0 $45.640 S 0 0 0 $(1,400) $ 0 0 0 0 0 $108.920 0 48.440 36.400 0 0 0 $(16.240) 0 0 (28) $10.332

Cash budget The following cash budget is for the third quarter of this year. Solve for the missing numbers on the cash budget, assuming that the accountant has requested a minimum cash balance of $9,800 at the start of each month. All borrowings, repayments, and investments are made in even $1,400 amounts. No borrowings or investments exist at the beginning of July. Beginning cash balance Cash receipts Total cash available Cash disbursements Payments on account Wages expense Overhead costs Total disbursements Cash excess (deficiency) Minimum cash balance Cash available (needed) $ Financing Borrowings (repayments) Acquire (sell) investments Receive (pay) interest Ending cash balance S S July $10.360 S 22.960 OS 0 14,000 11.200 $28.840 $ 0 (9.800) 0 $5.600 $ $10.080 S August September Total OS 28.280 0 $10.920 0 12.880 0 0 (9.800) S(12.320) S 0 OS OS 0 $57,400 $15.960 $ 17.360 0 $45.640 S 0 0 0 $(1,400) $ 0 0 0 0 0 $108.920 0 48.440 36.400 0 0 0 $(16.240) 0 0 (28) $10.332

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter6: Managing Cash Flow

Section: Chapter Questions

Problem 1EP

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Relevant data from the Poster Companys operating budgets are: Additional data: Capital assets were sold in January for $10,000 and $4,500 in May. Dividends of $4,500 were paid in February. The beginning cash balance was $60,359 and a required minimum cash balance is $59,000. Use this information to prepare a cash budget for the first two quarters of the year
Cash budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent 12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of 42,000, marketable securities of 25,000, and accounts receivable of 198,000 (150,000 from May sales and 48,000 from April sales). Sales on account in April and May were 120,000 and 150,000, respectively. Current liabilities as of June 1 include 13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of 24,000 will be made in July. Mercury Shoes regular quarterly dividend of 15,000 is expected to be declared in July and paid in August. Management desires to maintain a minimum cash balance of 40,000. Instructions Prepare a monthly cash budget and supporting schedules for June, July, and August. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
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