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 6a352cff3fd204c_1 Collections: Cash sales fill in the blank 6a352cff3fd204c_2 Credit sales: Current month $fill in the blank 6a352cff3fd204c_3 × fill in the blank 6a352cff3fd204c_4 % fill in the blank 6a352cff3fd204c_5 May credit sales $fill in the blank 6a352cff3fd204c_6 × fill in the blank 6a352cff3fd204c_7 % fill in the blank 6a352cff3fd204c_8 April credit sales fill in the blank 6a352cff3fd204c_9 Total cash available $fill in the blank 6a352cff3fd204c_10 Less disbursements: Inventory purchases: Current month $fill in the blank 6a352cff3fd204c_11 × fill in the blank 6a352cff3fd204c_12 % $fill in the blank 6a352cff3fd204c_13 Prior month $fill in the blank 6a352cff3fd204c_14 × fill in the blank 6a352cff3fd204c_15 % fill in the blank 6a352cff3fd204c_16 Salaries and wages fill in the blank 6a352cff3fd204c_17 Rent fill in the blank 6a352cff3fd204c_18 Taxes fill in the blank 6a352cff3fd204c_19 Total cash needs fill in the blank 6a352cff3fd204c_20 Excess of cash available over needs $fill in the blank 6a352cff3fd204c_21 2. Conceptual Connection: Did the business show a negative cash balance for June?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

100%

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 $736.
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 64% 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 $4,100 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 6a352cff3fd204c_1
Collections:
Cash sales	fill in the blank 6a352cff3fd204c_2
Credit sales:
Current month
$fill in the blank 6a352cff3fd204c_3 × fill in the blank 6a352cff3fd204c_4 %	fill in the blank 6a352cff3fd204c_5
May credit sales
$fill in the blank 6a352cff3fd204c_6 × fill in the blank 6a352cff3fd204c_7 %	fill in the blank 6a352cff3fd204c_8
April credit sales	fill in the blank 6a352cff3fd204c_9
Total cash available		$fill in the blank 6a352cff3fd204c_10
Less disbursements:
Inventory purchases:
Current month
$fill in the blank 6a352cff3fd204c_11 × fill in the blank 6a352cff3fd204c_12 %	$fill in the blank 6a352cff3fd204c_13
Prior month
$fill in the blank 6a352cff3fd204c_14 × fill in the blank 6a352cff3fd204c_15 %	fill in the blank 6a352cff3fd204c_16
Salaries and wages	fill in the blank 6a352cff3fd204c_17
Rent	fill in the blank 6a352cff3fd204c_18
Taxes	fill in the blank 6a352cff3fd204c_19
Total cash needs		fill in the blank 6a352cff3fd204c_20
Excess of cash available over needs		$fill in the blank 6a352cff3fd204c_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.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

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