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: Cash balance on June 1 is $1,236. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 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. Inventory purchases average 72% 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. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. Rent is $5,400 per month. 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 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. Cash Budget For June Beginning cash balance $fill in the blank 054c250d0022034_1 Collections: Cash sales fill in the blank 054c250d0022034_2 Credit sales: Current month $fill in the blank 054c250d0022034_3 × fill in the blank 054c250d0022034_4 % fill in the blank 054c250d0022034_5 May credit sales $fill in the blank 054c250d0022034_6 × fill in the blank 054c250d0022034_7 % fill in the blank 054c250d0022034_8 April credit sales fill in the blank 054c250d0022034_9 Total cash available $fill in the blank 054c250d0022034_10 Less disbursements: Inventory purchases: Current month $fill in the blank 054c250d0022034_11 × fill in the blank 054c250d0022034_12 % $fill in the blank 054c250d0022034_13 Prior month $fill in the blank 054c250d0022034_14 × fill in the blank 054c250d0022034_15 % fill in the blank 054c250d0022034_16 Salaries and wages fill in the blank 054c250d0022034_17 Rent fill in the blank 054c250d0022034_18 Taxes fill in the blank 054c250d0022034_19 Total cash needs fill in the blank 054c250d0022034_20 Excess of cash available over needs $fill in the blank 054c250d0022034_21 2. Conceptual Connection: Did the business show a negative cash balance for June?

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: Cash balance on June 1 is $1,236. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 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. Inventory purchases average 72% 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. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. Rent is $5,400 per month. 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 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. Cash Budget For June Beginning cash balance $fill in the blank 054c250d0022034_1 Collections: Cash sales fill in the blank 054c250d0022034_2 Credit sales: Current month $fill in the blank 054c250d0022034_3 × fill in the blank 054c250d0022034_4 % fill in the blank 054c250d0022034_5 May credit sales $fill in the blank 054c250d0022034_6 × fill in the blank 054c250d0022034_7 % fill in the blank 054c250d0022034_8 April credit sales fill in the blank 054c250d0022034_9 Total cash available $fill in the blank 054c250d0022034_10 Less disbursements: Inventory purchases: Current month $fill in the blank 054c250d0022034_11 × fill in the blank 054c250d0022034_12 % $fill in the blank 054c250d0022034_13 Prior month $fill in the blank 054c250d0022034_14 × fill in the blank 054c250d0022034_15 % fill in the blank 054c250d0022034_16 Salaries and wages fill in the blank 054c250d0022034_17 Rent fill in the blank 054c250d0022034_18 Taxes fill in the blank 054c250d0022034_19 Total cash needs fill in the blank 054c250d0022034_20 Excess of cash available over needs $fill in the blank 054c250d0022034_21 2. Conceptual Connection: Did the business show a negative cash balance for June?

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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Question

Cash Budget

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:

Cash balance on June 1 is $1,236.
Actual sales for April and May are as follows:

April May

Cash sales $10,000 $18,000

Credit sales 28,900 35,000

Total sales $38,900 $53,000
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.
Inventory purchases average 72% 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.
Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner.
Rent is $5,400 per month.
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 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.

Cash Budget For June
Beginning cash balance	$fill in the blank 054c250d0022034_1
Collections:
Cash sales	fill in the blank 054c250d0022034_2
Credit sales:
Current month
$fill in the blank 054c250d0022034_3 × fill in the blank 054c250d0022034_4 %	fill in the blank 054c250d0022034_5
May credit sales
$fill in the blank 054c250d0022034_6 × fill in the blank 054c250d0022034_7 %	fill in the blank 054c250d0022034_8
April credit sales	fill in the blank 054c250d0022034_9
Total cash available		$fill in the blank 054c250d0022034_10
Less disbursements:
Inventory purchases:
Current month
$fill in the blank 054c250d0022034_11 × fill in the blank 054c250d0022034_12 %	$fill in the blank 054c250d0022034_13
Prior month
$fill in the blank 054c250d0022034_14 × fill in the blank 054c250d0022034_15 %	fill in the blank 054c250d0022034_16
Salaries and wages	fill in the blank 054c250d0022034_17
Rent	fill in the blank 054c250d0022034_18
Taxes	fill in the blank 054c250d0022034_19
Total cash needs		fill in the blank 054c250d0022034_20
Excess of cash available over needs		$fill in the blank 054c250d0022034_21

2. Conceptual Connection: Did the business show a negative cash balance for June?

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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	April	May
Cash sales	$10,000		$18,000
Credit sales	28,900		35,000
Total sales	$38,900		$53,000