Required:1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.Sonoma Housewares Inc.Cash BudgetFor the Three Months Ending July 31MayJuneEstimated cash receipts from:Cash salesCollection of accounts receivableTotal 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 (deficiency)$July2. The budget indicates that the minimum cash balanceare held for such purposes. At the end of May and June, the cash balance willbe maintained in July. This situation can be corrected bythe minimum desired balance.and/or by theof the marketable securities, if they Cash BudgetThe controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:MayJuneJuly$109,000 $136,000 $174,000M46,000 58,00063,00032,000SalesManufacturing costsSelling and administrative expensesCapital expenditures37,00038,00042,000The company expects to sell about 15% 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 $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of theremainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month.Current assets as of May 1 include cash of $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($95,000 from April sales and $26,100 from March sales). Sales on account for March and April were $87,000and $95,000, respectively. Current liabilities as of May 1 include $10,500 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimatedincome tax payment of $16,000 will be made in June. Sonoma's regular quarterly dividend of $10,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $32,000.

A cash budget is created to project the cash payments and receipts made over a given time period.…

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July $109,000 $135,000 $174,000 Manufacturing costs 46,000 58,000 63,000 Selling and administrative expenses 32,000 37,000 Capital expenditures Sales 38,000 42,000 The company expects to sell about 15% 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 $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of May 1 include cash of $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($95,000 from April sales and $26,100 from March sales). Sales on account for March and April were $87,000 and $95,000, respectively. Current liabilities as of May 1 include $10,500 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $16,000 will be made in June. Sonoma's regular quarterly dividend of $10,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $32,000.

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...