Question 1 ONLYSonoma Housewares, Inc.Cash BudgetFor the Three Months Ending July 31, 2021MayJuneJulyEstimated cash receipts from:Cash salesCollection of accounts receivableFormula BarTotal cash receiptsEstimated cash payments for:Manufacturing costsSelling and administrative expensesCapital expendituresOther purposes:Income taxDividendsTotal cash paymentsCash increase or (decrease)Cash balance at beginning of monthCash balance at end of monthMinimum cash balanceExcess or (deficiency) PR 22-4A Cash budgetOBJ. 5The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bud-get for the next three months. You are presented with the following budget information:MayJuneJulySales .Manufacturing costs..Selling and administrative expenses$86,000$90,000$95,00034,00039,00044,00015,00016,00022,000Capital expenditures80,000The company expects to sell about 10% of its merchandise for cash. Of sales onaccount, 70% are expected to be collected in the month following the sale and the re-mainder the following month (second month following sale). Depreciation, insurance,and property tax expense represent $3,500 of the estimated monthly manufacturing costs.The annual insurance premium is paid in September, and the annual property taxes arepaid in November. Of the remainder of the manufacturing costs, 80% are expected to bepaid in the month in which they are incurred and the balance in the following month.Current assets as of May 1 include cash of $33,000, marketable securities of $40,000,and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from Marchsales). Sales on account for March and April were $60,000 and $72,000, respectively.Current liabilities as of May 1 include $6,000 of accounts payable incurred in April formanufacturing costs. All selling and administrative expenses are paid in cash in the pe-riod they are incurred. An estimated income tax payment of $14,000 will be made inJune. Sonoma's regular quarterly dividend of $5,000 is expected to be declared in Juneand paid in July. Management desires to maintain a minimum cash balance of $30,000.Instructions1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016.

Solution 1: Computation of Collection from Customer Particulars May June July Collection for…

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bu get for the next three months. You are presented with the following budget information May June July Sales .. $86,000 $90,000 $95,000 Manufacturing costs.. Selling and administrative expenses . Capital expenditures 34,000 39,000 44,000 15,000 16,000 22,000 80,000 The company expects to sell about 10% of its merchandise for cash. Of sales c account, 70% are expected to be collected in the month following the sale and the r

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bu get for the next three months. You are presented with the following budget information May June July Sales .. $86,000 $90,000 $95,000 Manufacturing costs.. Selling and administrative expenses . Capital expenditures 34,000 39,000 44,000 15,000 16,000 22,000 80,000 The company expects to sell about 10% of its merchandise for cash. Of sales c account, 70% are expected to be collected in the month following the sale and the r

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter4: Internal Control And Cash

Section: Chapter Questions

Problem 66.1C

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