ABC Company manufactures and sells lighting fixtures. Estimated sales for the next three months are; September $350,000 October – $500,000 November – $400,000 Sales for August were $400,000. All sales are on account, ABC Company estimates that 60% of the accounts receivable are collected in the month of sale with the remaining 40% collected the following month. The units sell for $30 each. The cash balance for September 1 is $100,000. Generally, 60% of purchases are due and payable in the month of purchase with the remainder due the following month. Purchase cost per unit for materials is $18. The company maintains an end-of-the-month inventory of 1,000 units plus 10% of next month's unit sales. In addition to the information given, selling and administrative expenses paid in cash are $120,000 per month. Requirement: Prepare a monthly cash budget for September and October for ABC Company.

ABC Company manufactures and sells lighting fixtures. Estimated sales for the next three months are; September $350,000 October – $500,000 November – $400,000 Sales for August were $400,000. All sales are on account, ABC Company estimates that 60% of the accounts receivable are collected in the month of sale with the remaining 40% collected the following month. The units sell for $30 each. The cash balance for September 1 is $100,000. Generally, 60% of purchases are due and payable in the month of purchase with the remainder due the following month. Purchase cost per unit for materials is $18. The company maintains an end-of-the-month inventory of 1,000 units plus 10% of next month's unit sales. In addition to the information given, selling and administrative expenses paid in cash are $120,000 per month. Requirement: Prepare a monthly cash budget for September and October for ABC Company.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter21: Cash Budgeting (cashbud)

Section: Chapter Questions

Problem 1R: On January 1, Sweet Pleasures, Inc., begins business. The company has 14,000 cash on hand and is...

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Question

100%

ABC Company manufactures and sells lighting fixtures. Estimated sales for the next three
months are;
September – $350,000
October – $500,000
November – $400,000
Sales for August were $400,000. All sales are on account, ABC Company
estimates that 60% of the accounts receivable are collected in the month of sale with
the remaining 40% collected the following month. The units sell for $30 each. The cash
balance for September 1 is $100,000. Generally, 60% of purchases are due and payable in the
month of purchase with the remainder due the following month. Purchase cost per unit for
materials is $18. The company maintains an end-of-the-month inventory of 1,000 units plus
10% of next month's unit sales. In addition to the information given, selling and administrative
expenses paid in cash are $120,000 per month.
Requirement: Prepare a monthly cash budget for September and October for ABC Company.

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