Paper Corporation expects to have the sales and expenses shown for August, September,and October. The company expects to receive 55% of collections for sales in the month the sale occurs, 35% in the following month, and the remainder to be uncollectible. The company policy for manufacturing expenses requires that 70% of the expenses be paid in the month incurred and 30% in the following month. All other expenses are paid in the month incurred. The company also earns and collects $5,000 of rental revenue eachmonth. At the end of the quarter, Paper Corporation must make an estimated tax payment, which the company estimates will be 7% of the quarter’s total sales. Prepare the cash budget for the three months if cash as of August 1, 2015, totaled $51,500. The company requires a $50,000 minimum cash balance. July August September October Sales $34,000 $39,000 $46,000 $40,000 Manufacturing costs 15,200 16,800 20,100 19,900 Selling expenses 10,000 10,200 14,500 16,500 Administrative expenses 12,000 12,500 13,000 13,500 Prepare the cash budget for the three months if cash as of August 1, 2015, totaled $51,500. The company requires a $50,000 minimum cash balance.
Paper Corporation expects to have the sales and expenses shown for August, September,and
October. The company expects to receive 55% of collections for sales in the month the sale
occurs, 35% in the following month, and the remainder to be uncollectible. The company
policy for manufacturing expenses requires that 70% of the expenses be paid in the month
incurred and 30% in the following month. All other expenses are paid in the month incurred.
The company also earns and collects $5,000 of rental revenue eachmonth. At the end of the
quarter, Paper Corporation must make an estimated tax payment, which the company
estimates will be 7% of the quarter’s total sales. Prepare the cash budget for the three months
if cash as of August 1, 2015, totaled $51,500. The company requires a $50,000 minimum cash
balance.
| July | August | September | October | |
| Sales | $34,000 | $39,000 | $46,000 | $40,000 |
| 15,200 | 16,800 | 20,100 | 19,900 | |
| Selling expenses | 10,000 | 10,200 | 14,500 | 16,500 |
| Administrative expenses | 12,000 | 12,500 | 13,000 | 13,500 |
Prepare the cash budget for the three months if cash as of August 1, 2015, totaled $51,500.
The company requires a $50,000 minimum cash balance.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
