Calculate the accounts payable balance on the Balance Sheet for the month September.Prepare a cash budget for the month of September. **Problem 1**As treasurer of a manufacturing company, you are preparing a cash budget for September of the next fiscal year. The information for September you have at your disposal to complete this task is as follows:(a) Next year's sales forecast follows: - July: $350,000 - August: $240,000 - September: $300,000 - October: $360,000(b) The sales price is $60.(c) Each month, 20% of the sales are for cash and 80% are on credit.(d) The AR collection pattern for credit sales is: - 20% is received in 0-30 days - 50% is received in 31-60 days - 30% is received in 60-90 days(e) The cash in bank at the beginning of September is $15,400.(f) The per-unit production cost data is: - Direct material: $20 - Direct labor: 1 direct labor hour per unit; $15 direct labor rate(g) The company monthly beginning FG inventory policy is to maintain a minimum of 25% of the current month's sales.(h) The AP pattern for credit purchases is: - 30% is paid in 0-30 days - 70% is paid in 31-60 days(i) There is an income tax payment of $35,000 at the end of each quarter.(j) The company accrues $30,000 for dividend payment made on the month following the end of each quarter.(k) Recurring monthly overhead expenses are $35,000 and are composed of the following: - Cost Behavior: - Fixed cost: $20,000 - Variable cost: $15,000 - Depreciation expense included in overhead: $5,000(l) Recurring monthly SG&A is $44,000 including $4,000 depreciation.(m) The company has a policy of maintaining a minimum cash balance of $15,000. If necessary, the company can borrow in multiples of $1,000 at a simple interest rate of 10% per year. All borrowings occur at the beginning of the month in which the amount is borrowed while all repayments occur at the end of a month in which there is an excess of cash above the minimum balance. Interest is paid on the amount

The cash budget is prepared by the organization to know the cash requirement for the period it is…

Answered: As treasurer of a manufacturing…

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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Calculate the accounts payable balance on the Balance Sheet for the month September.
Prepare a cash budget for the month of September.

**Problem 1**

As treasurer of a manufacturing company, you are preparing a cash budget for September of the next fiscal year. The information for September you have at your disposal to complete this task is as follows:

(a) Next year's sales forecast follows:
- July: $350,000
- August: $240,000
- September: $300,000
- October: $360,000

(b) The sales price is $60.

(c) Each month, 20% of the sales are for cash and 80% are on credit.

(d) The AR collection pattern for credit sales is:
- 20% is received in 0-30 days
- 50% is received in 31-60 days
- 30% is received in 60-90 days

(e) The cash in bank at the beginning of September is $15,400.

(f) The per-unit production cost data is:
- Direct material: $20
- Direct labor: 1 direct labor hour per unit; $15 direct labor rate

(g) The company monthly beginning FG inventory policy is to maintain a minimum of 25% of the current month's sales.

(h) The AP pattern for credit purchases is:
- 30% is paid in 0-30 days
- 70% is paid in 31-60 days

(i) There is an income tax payment of $35,000 at the end of each quarter.

(j) The company accrues $30,000 for dividend payment made on the month following the end of each quarter.

(k) Recurring monthly overhead expenses are $35,000 and are composed of the following:
- Cost Behavior:
- Fixed cost: $20,000
- Variable cost: $15,000
- Depreciation expense included in overhead: $5,000

(l) Recurring monthly SG&A is $44,000 including $4,000 depreciation.

(m) The company has a policy of maintaining a minimum cash balance of $15,000. If necessary, the company can borrow in multiples of $1,000 at a simple interest rate of 10% per year. All borrowings occur at the beginning of the month in which the amount is borrowed while all repayments occur at the end of a month in which there is an excess of cash above the minimum balance. Interest is paid on the amount

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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