The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation: September October November Sales $96,000 $113,000 $162,000 Manufacturing costs 40,000 49,000 58,000 Selling and administrative expenses 34,000 34,000 62,000 Capital expenditures _ _ 39,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. 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 September 1 include cash of $36,000, marketable securities of $52,000, and accounts receivable of $107,100 ($23,100 from July sales and $84,000 from August sales). Sales on account for July and August were $77,000 and $84,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport’s regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $35,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations. Bridgeport Housewares Inc.Cash BudgetFor the Three Months Ending November 30 September October November Estimated cash receipts from: $- Select - $- Select - $- Select - - Select - - Select - - Select - Total cash receipts $fill in the blank 275ef4034f9807c_9 $fill in the blank 275ef4034f9807c_10 $fill in the blank 275ef4034f9807c_11 Less estimated cash payments for: $- Select - $- Select - $- Select - - Select - - Select - - Select - - Select - Other purposes: - Select - - Select - Total cash payments $fill in the blank 275ef4034f9807c_26 $fill in the blank 275ef4034f9807c_27 $fill in the blank 275ef4034f9807c_28 $- Select - $- Select - - Select - - Select - - Select - - Select - Cash balance at end of month $fill in the blank 275ef4034f9807c_37 $fill in the blank 275ef4034f9807c_38 $fill in the blank 275ef4034f9807c_39 - Select - - Select - - Select - Excess or (deficiency) $fill in the blank 275ef4034f9807c_44 $fill in the blank 275ef4034f9807c_45 $fill in the blank 275ef4034f9807c_46 Feedback 2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? The budget indicates that the minimum cash balance be maintained in November. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will the minimum desired balance.

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation: September October November Sales $96,000 $113,000 $162,000 Manufacturing costs 40,000 49,000 58,000 Selling and administrative expenses 34,000 34,000 62,000 Capital expenditures _ _ 39,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. 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 September 1 include cash of $36,000, marketable securities of $52,000, and accounts receivable of $107,100 ($23,100 from July sales and $84,000 from August sales). Sales on account for July and August were $77,000 and $84,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport’s regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $35,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations. Bridgeport Housewares Inc.Cash BudgetFor the Three Months Ending November 30 September October November Estimated cash receipts from: $- Select - $- Select - $- Select - - Select - - Select - - Select - Total cash receipts $fill in the blank 275ef4034f9807c_9 $fill in the blank 275ef4034f9807c_10 $fill in the blank 275ef4034f9807c_11 Less estimated cash payments for: $- Select - $- Select - $- Select - - Select - - Select - - Select - - Select - Other purposes: - Select - - Select - Total cash payments $fill in the blank 275ef4034f9807c_26 $fill in the blank 275ef4034f9807c_27 $fill in the blank 275ef4034f9807c_28 $- Select - $- Select - - Select - - Select - - Select - - Select - Cash balance at end of month $fill in the blank 275ef4034f9807c_37 $fill in the blank 275ef4034f9807c_38 $fill in the blank 275ef4034f9807c_39 - Select - - Select - - Select - Excess or (deficiency) $fill in the blank 275ef4034f9807c_44 $fill in the blank 275ef4034f9807c_45 $fill in the blank 275ef4034f9807c_46 Feedback 2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? The budget indicates that the minimum cash balance be maintained in November. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will the minimum desired balance.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 5PA: Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash...

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Question

Cash Budget

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:

	September	October	November
Sales	$96,000		$113,000	$162,000
Manufacturing costs	40,000		49,000	58,000
Selling and administrative expenses	34,000		34,000	62,000
Capital expenditures	_		_	39,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. 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 September 1 include cash of $36,000, marketable securities of $52,000, and accounts receivable of $107,100 ($23,100 from July sales and $84,000 from August sales). Sales on account for July and August were $77,000 and $84,000, respectively. Current liabilities as of September 1 include $6,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport’s regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $35,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Bridgeport Housewares Inc.Cash BudgetFor the Three Months Ending November 30

	September	October	November
Estimated cash receipts from:
	$- Select -	$- Select -	$- Select -
	- Select -	- Select -	- Select -
Total cash receipts	$fill in the blank 275ef4034f9807c_9	$fill in the blank 275ef4034f9807c_10	$fill in the blank 275ef4034f9807c_11
Less estimated cash payments for:
	$- Select -	$- Select -	$- Select -
	- Select -	- Select -	- Select -
			- Select -
Other purposes:
		- Select -
			- Select -
Total cash payments	$fill in the blank 275ef4034f9807c_26	$fill in the blank 275ef4034f9807c_27	$fill in the blank 275ef4034f9807c_28
	$- Select -	$- Select -	- Select -
	- Select -	- Select -	- Select -
Cash balance at end of month	$fill in the blank 275ef4034f9807c_37	$fill in the blank 275ef4034f9807c_38	$fill in the blank 275ef4034f9807c_39
	- Select -	- Select -	- Select -
Excess or (deficiency)	$fill in the blank 275ef4034f9807c_44	$fill in the blank 275ef4034f9807c_45	$fill in the blank 275ef4034f9807c_46

Feedback

2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?

The budget indicates that the minimum cash balance

be maintained in November. This situation can be corrected by

and/or by the

of the marketable securities, if they are held for such purposes. At the end of September and October, the cash balance will

the minimum desired balance.

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