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The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales May $10,000 $18,000 28,900 35,000 Total sales $38,900 $53,000 c. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. d. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. 9g. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company

The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales May $10,000 $18,000 28,900 35,000 Total sales $38,900 $53,000 c. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. d. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. 9g. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company

Managerial Accounting: The Cornerstone of Business Decision-Making
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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The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales $10,000 28,900 Total sales $38,900 $53,000 c. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. d. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. g. Taxes to be paid in June are $6,780. May $18,000 35,000 Cash Budget For June The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn't have access to short-term loans. Required: 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers.
Transcribed Image Text:The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales $10,000 28,900 Total sales $38,900 $53,000 c. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. d. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. g. Taxes to be paid in June are $6,780. May $18,000 35,000 Cash Budget For June The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn't have access to short-term loans. Required: 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers.
Beginning cash balance Collections: Cash sales Credit sales: Current month May credit sales April credit sales Total cash available Less disbursements: Inventory purchases: X Current month Total cash available April credit sales Prior month Less disbursements: Inventory purchases: Rent X Current month Prior month Yes No X Taxes Salaries and wages Total cash needs % % Excess of cash available over needs % % % Cash Budget For June 00 000 0000 2. Conceptual Connection: Did the business show a negative cash balance for June?
Transcribed Image Text:Beginning cash balance Collections: Cash sales Credit sales: Current month May credit sales April credit sales Total cash available Less disbursements: Inventory purchases: X Current month Total cash available April credit sales Prior month Less disbursements: Inventory purchases: Rent X Current month Prior month Yes No X Taxes Salaries and wages Total cash needs % % Excess of cash available over needs % % % Cash Budget For June 00 000 0000 2. Conceptual Connection: Did the business show a negative cash balance for June?
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