PART A: Use the following information to prepare a budgeted balance sheet for Grover Company for the month of June. The budgeted net income for the month of June is $236,000. The beginning cash balance is $62,000; total budgeted cash receipts are $1,660,000; total budgeted cash disbursements are $1,580,000. Budgeted sales for June are $1,700,000. Collections are 40% in the month of sale and 60% in the month following. The projected inventory balance is 10% of the following month's sales. Sales for July are projected to be $1,750,000. Budgeted purchases for June are $900,000 to be paid 80% in the month of purchase and 20% in the month following. The equipment account balance is $1,400,000 on May 31. No equipment purchases or disposals were made during June. On May 31, the accumulated depreciation is $276,000. Depreciation expense for June is estimated to be $24,000. There is an outstanding loan balance of $800,000. Accrued income taxes payable for June 30 are $71,000; and salaries payable are $50,000. The only other balance sheet accounts are: Common Stock, with a balance of $800,000 on May 31, and Retained Earnings with a balance of $300,000 on May 31. No additional common stock was issued and no dividends were paid during June. PART B: Use the following information to prepare a budgeted income statement for Stellar Company for the month of June. Beginning cash balance on June 1 is $52,000. Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000. Cost of goods sold is 53% of sales. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30. Budgeted depreciation expense for June: $24,000. Other cash expenses budgeted for June: $282,000. Accrued income taxes due in June: $48,000. Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000. The income tax rate applicable to the company is 30%. PART C: Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: April May Sales ………………………………………………. $150,000 $157,500 Merchandise purchases …………………………… 107,000 112,400 Operating expenses: Payroll …………………………………… 13,600 14,280 Advertising ………………………………… 5,400 5,700 Rent ………………………………………… 2,500 2,500 Depreciation ……………………………… 7,500 7,500 End of April balances: Cash ………………………………………… 30,000 Bank loan payable ………………………… 26,000 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $25,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made whenever excess cash is available. Prepare the company's cash budget for May. Show the ending loan balance at May 31.

PART A: Use the following information to prepare a budgeted balance sheet for Grover Company for the month of June. The budgeted net income for the month of June is $236,000. The beginning cash balance is $62,000; total budgeted cash receipts are $1,660,000; total budgeted cash disbursements are $1,580,000. Budgeted sales for June are $1,700,000. Collections are 40% in the month of sale and 60% in the month following. The projected inventory balance is 10% of the following month's sales. Sales for July are projected to be $1,750,000. Budgeted purchases for June are $900,000 to be paid 80% in the month of purchase and 20% in the month following. The equipment account balance is $1,400,000 on May 31. No equipment purchases or disposals were made during June. On May 31, the accumulated depreciation is $276,000. Depreciation expense for June is estimated to be $24,000. There is an outstanding loan balance of $800,000. Accrued income taxes payable for June 30 are $71,000; and salaries payable are $50,000. The only other balance sheet accounts are: Common Stock, with a balance of $800,000 on May 31, and Retained Earnings with a balance of $300,000 on May 31. No additional common stock was issued and no dividends were paid during June. PART B: Use the following information to prepare a budgeted income statement for Stellar Company for the month of June. Beginning cash balance on June 1 is $52,000. Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000. Cost of goods sold is 53% of sales. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30. Budgeted depreciation expense for June: $24,000. Other cash expenses budgeted for June: $282,000. Accrued income taxes due in June: $48,000. Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000. The income tax rate applicable to the company is 30%. PART C: Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted: April May Sales ………………………………………………. $150,000 $157,500 Merchandise purchases …………………………… 107,000 112,400 Operating expenses: Payroll …………………………………… 13,600 14,280 Advertising ………………………………… 5,400 5,700 Rent ………………………………………… 2,500 2,500 Depreciation ……………………………… 7,500 7,500 End of April balances: Cash ………………………………………… 30,000 Bank loan payable ………………………… 26,000 Additional data: (1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000. (2) Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month. (3) Operating expenses are paid in the month they are incurred. (4) A minimum cash balance of $25,000 is required at the end of each month. (5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made whenever excess cash is available. Prepare the company's cash budget for May. Show the ending loan balance at May 31.

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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PART A:

Use the following information to prepare a budgeted balance sheet for Grover Company for the month of June.

The budgeted net income for the month of June is $236,000.
The beginning cash balance is $62,000; total budgeted cash receipts are $1,660,000; total budgeted cash disbursements are $1,580,000.
Budgeted sales for June are $1,700,000. Collections are 40% in the month of sale and 60% in the month following.
The projected inventory balance is 10% of the following month's sales. Sales for July are projected to be $1,750,000.
Budgeted purchases for June are $900,000 to be paid 80% in the month of purchase and 20% in the month following.
The equipment account balance is $1,400,000 on May 31. No equipment purchases or disposals were made during June. On May 31, the accumulated depreciation is $276,000. Depreciation expense for June is estimated to be $24,000.
There is an outstanding loan balance of $800,000.
Accrued income taxes payable for June 30 are $71,000; and salaries payable are $50,000.
The only other balance sheet accounts are: Common Stock, with a balance of $800,000 on May 31, and Retained Earnings with a balance of $300,000 on May 31. No additional common stock was issued and no dividends were paid during June.

PART B:

Use the following information to prepare a budgeted income statement for Stellar Company for the month of June.

Beginning cash balance on June 1 is $52,000.
Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000.
Cost of goods sold is 53% of sales.
Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 and are expected to be $50,000 on June 30.
Budgeted depreciation expense for June: $24,000.
Other cash expenses budgeted for June: $282,000.
Accrued income taxes due in June: $48,000.
Bank loan interest due in June: $8,000 which represents the 1% monthly expense on a bank loan of $800,000.
The income tax rate applicable to the company is 30%.

PART C:

Todd Enterprises is preparing a cash budget for the second quarter of the coming year. The following data have been forecasted:

	April	May
Sales ……………………………………………….	$150,000	$157,500
Merchandise purchases ……………………………	107,000	112,400
Operating expenses:
Payroll ……………………………………	13,600	14,280
Advertising …………………………………	5,400	5,700
Rent …………………………………………	2,500	2,500
Depreciation ………………………………	7,500	7,500
End of April balances:
Cash …………………………………………	30,000
Bank loan payable …………………………	26,000

Additional data:

(1) Sales are 40% cash and 60% credit. The collection pattern for credit sales is 50% in the month following the sale and 50% in the month thereafter. Total sales in March were $125,000.

(2) Purchases are all on credit, with 40% paid in the month of purchase and the balance paid in the following month.

(3) Operating expenses are paid in the month they are incurred.

(4) A minimum cash balance of $25,000 is required at the end of each month.

(5) Loans are used to maintain the minimum cash balance. At the end of each month, interest of 1% per month is paid on the outstanding loan balance as of the beginning of the month. Repayments are made whenever excess cash is available.

Prepare the company's cash budget for May. Show the ending loan balance at May 31.

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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