Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next threemonths follow.April$ 30,000JuneBudgetedSalesCash payments for merchandisepurchasesMay$ 42,000$ 26,00024,20014,80013,500Sales are 80% cash and 20% on credit. Sales in March were $26,000. All credit sales are collected in the month following the sale. TheMarch 31 balance sheet includes balances of $14,000 in cash and $4,000 in loans payable. A minimum cash balance of $14,000 isrequired. Loans are obtained at the end of any month when the preliminary cash balance is below $12,000. Interest is 1% per monthbased on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $12,000 atmonth-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (10% ofsales), shipping (4% of sales), office salaries ($7,000 per month), and rent ($5,000 per month).(a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June.(Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to thenearest whole dollar.)Answer is not complete. CASTOR INCORPORATEDSchedule of Cash Receipts from SalesMayAprilJune30,00042,0002$26,000Cash receipts from8,400 8 s24,000 86,000s5,200 8Cash salesCollections of prior period sales14,00033,600Total cash receipts20,00032,40038,800CASTOR, INCORPORATEDCash BudgetAprilMayJuneBeginning cash balance14,00014,00014,000 XAdd: Cash receipts from sales20,00032,40038,800Total cash available34,00046,40052,800Less: Cash payments for:Merchandise24,20014,80013,500Sales commissions3,0004,2002,600Shipping1,2001,6801,040Rent5,000 O5,000 O5,0007,000 O7,0007,000140Office salariesInterest on loan40Total cash payments40,44032,82029,140Preliminary cash balanceAdditional loan (loan repayment)13,580 8420 9(6,440) 823,660 X7,560Ending cash balance14,00014,00023,660Loan balanceAprilMayJuneLoan balance - Beginning of month4,00011,560Additional loan (loan repayment)7,560 3420Loan balance - End of month11,560 8%24

00 in cash and $4,000 in loans payable. A minimum cas th when the preliminary cash balance is below $12,000 and is paid at each month-end. If a preliminary cash bal Expenses are paid in the month incurred and include s O per month), and rent ($5,000 per month).

00 in cash and $4,000 in loans payable. A minimum cas th when the preliminary cash balance is below $12,000 and is paid at each month-end. If a preliminary cash bal Expenses are paid in the month incurred and include s O per month), and rent ($5,000 per month).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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