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2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.)

2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.)

FINANCIAL ACCOUNTING
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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Built-Tight is preparing its master budget. Budgeted sales and cash payments follow: August $ 72,000 September $ 56,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Overhead Beginning cash balance Total cash available Less: Cash payments for Sales to customers are 20% cash and 80% on credit. Sales in June were $53,500. All credit sales are collected in the month following the sale. The June 30 balance sheet Includes balances of $47,000 in cash and $4,400 In loans payable. A minimum cash balance of $47,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $47,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. Any preliminary cash balance above $47,000 is used to repay loans at month-end. Expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,400 per month), and rent ($5,900 per month). Total cash payments Preliminary cash balance 2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.) Loan activity Additional loan Repayment of loan to bank Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month July $ 56,000 BUILT-TIGHT Cash Budget July 15,560 3,440 19,600 Loan balance July 12,840 2,760 16, 200 August August 13,160 2,840 16,600 September September
Transcribed Image Text:Built-Tight is preparing its master budget. Budgeted sales and cash payments follow: August $ 72,000 September $ 56,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Overhead Beginning cash balance Total cash available Less: Cash payments for Sales to customers are 20% cash and 80% on credit. Sales in June were $53,500. All credit sales are collected in the month following the sale. The June 30 balance sheet Includes balances of $47,000 in cash and $4,400 In loans payable. A minimum cash balance of $47,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $47,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. Any preliminary cash balance above $47,000 is used to repay loans at month-end. Expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,400 per month), and rent ($5,900 per month). Total cash payments Preliminary cash balance 2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.) Loan activity Additional loan Repayment of loan to bank Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month July $ 56,000 BUILT-TIGHT Cash Budget July 15,560 3,440 19,600 Loan balance July 12,840 2,760 16, 200 August August 13,160 2,840 16,600 September September
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