ash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:   May June July Sales $114,000   $144,000   $190,000   Manufacturing costs 48,000   62,000   68,000   Selling and administrative expenses 33,000   39,000   42,000   Capital expenditures _   _   46,000   The company expects to sell about 12% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of May 1 include cash of $43,000, marketable securities of $62,000, and accounts receivable of $127,300 ($100,000 from April sales and $27,300 from March sales). Sales on account for March and April were $91,000 and $100,000, respectively. Current liabilities as of May 1 include $14,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $17,000 will be made in June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $34,000. Required: 1.  Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Sonoma Housewares Inc.Cash BudgetFor the Three Months Ending July 31   May June July Estimated cash receipts from:       Cash sales $fill in the blank $fill in the blank $fill in the blank Collection of accounts receivable fill in the blank fill in the blank fill in the blank Total cash receipts $fill in the blank $fill in the blank $fill in the blank Estimated cash payments for:       Manufacturing costs $fill in the blank $fill in the blank $fill in the blank Selling and administrative expenses fill in the blank fill in the blank fill in the blank Capital expenditures     fill in the blank Other purposes:       Income tax   fill in the blank   Dividends     fill in the blank Total cash payments $fill in the blank $fill in the blank $fill in the blank Cash increase or (decrease) $fill in the blank $fill in the blank $fill in the blank Cash balance at beginning of month fill in the blank fill in the blank fill in the blank Cash balance at end of month $fill in the blank $fill in the blank $fill in the blank Minimum cash balance fill in the blank fill in the blank fill in the blank Excess (deficiency) $fill in the blank $fill in the blank $fill in the blank

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 5PA: Cash budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash...
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Cash Budget

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

  May June July
Sales $114,000   $144,000   $190,000  
Manufacturing costs 48,000   62,000   68,000  
Selling and administrative expenses 33,000   39,000   42,000  
Capital expenditures _   _   46,000  

The company expects to sell about 12% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $8,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of May 1 include cash of $43,000, marketable securities of $62,000, and accounts receivable of $127,300 ($100,000 from April sales and $27,300 from March sales). Sales on account for March and April were $91,000 and $100,000, respectively. Current liabilities as of May 1 include $14,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $17,000 will be made in June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $34,000.

Required:

1.  Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Sonoma Housewares Inc.Cash BudgetFor the Three Months Ending July 31
  May June July
Estimated cash receipts from:      
Cash sales $fill in the blank $fill in the blank $fill in the blank
Collection of accounts receivable fill in the blank fill in the blank fill in the blank
Total cash receipts $fill in the blank $fill in the blank $fill in the blank
Estimated cash payments for:      
Manufacturing costs $fill in the blank $fill in the blank $fill in the blank
Selling and administrative expenses fill in the blank fill in the blank fill in the blank
Capital expenditures     fill in the blank
Other purposes:      
Income tax   fill in the blank  
Dividends     fill in the blank
Total cash payments $fill in the blank $fill in the blank $fill in the blank
Cash increase or (decrease) $fill in the blank $fill in the blank $fill in the blank
Cash balance at beginning of month fill in the blank fill in the blank fill in the blank
Cash balance at end of month $fill in the blank $fill in the blank $fill in the blank
Minimum cash balance fill in the blank fill in the blank fill in the blank
Excess (deficiency) $fill in the blank $fill in the blank $fill in the blank
 
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