Avery Company has prepared the following schedules and additional information: 1(Click the icon to view the cash receipts schedule.) 2(Click the icon to view the cash payments schedule.) 3(Click the icon to view the additional information.) Complete a cash budget for Avery Company for January, February and March. (Complete all input fields. Enter a "0" for any zero balances. Round all amounts entered into the cash budget to the nearest whole dollar. Enter a cash deficiency with a minus sign or parentheses.) Avery Company Cash Budget January, February, and March January Beginning cash balance $5,500 Cash receipts 10,800 Cash available 16,300 Cash payments: Purchases of direct materials 0 Direct labor 2,900 Manufacturing overhead 3,720 Selling and administrative expenses 5,920 Interest expense 0 Total cash payments 12,540 Ending cash balance before financing 3,760 Minimum cash balance desired (5,500) Projected cash excess (deficiency) (1,740) Financing: Borrowing 2,000 Principal repayments 0 Total effects of financing 2,000 Ending cash balance $5,760 February $5,760 14,380 20,140 3,900 3,100 850 4,550 18 12,418 7,722 (5,500) 2,222 0 (2,000) (2,000) $5,722 March $5,722 13,640 19,362 3,600 4,000 850 4,550 0 13,000 6,362 (5,500) 862 0 0 0 $6,362 Total 1: Reference Cash Receipts from Customers January February March Total Total sales $13,500 $14,600 $13,400 $41,500 January February March Total Cash Receipts from Customers: Accounts Receivable balance, January 1 January—Cash sales $8,100 January—Credit sales, collection of January sales in January 2,700 January—Credit sales, collection of January sales in February $2,700 February—Cash sales 8,760 February—Credit sales, collection of February sales in February 2,920 February—Credit sales, collection of February sales in March $2,920 March—Cash sales 8,040 March—Credit sales, collection of March sales in March 2,680 Total cash receipts from customers $10,800 $14,380 $13,640 $38,820 Accounts Receivable balance, March 31: March—Credit sales, collection of March sales in April $2,680 2: Reference January February March Total Cash Payments Direct Materials: Accounts Payable balance, January 1 $0 January—Direct material purchases paid in February $3,900 February—Direct material purchases paid in March $3,600 Total payments for direct materials 0 3,900 3,600 $7,500 Direct Labor: Total payments for direct labor 2,900 3,100 4,000 10,000 Manufacturing Overhead: Utilities for plant 850 850 1,700 Property taxes on plant 3,720 3,720 Total payments for manufacturing overhead 3,720 850 850 5,420 Selling and Administrative Expenses: Utilities for office 550 550 1,100 Property taxes on office 1,920 1,920 Office salaries 4,000 4,000 4,000 12,000 Total payments for Selling and Admin. expenses 5,920 4,550 4,550 15,020 Total cash payments $12,540 $12,400 $13,000 $37,940 Acccount balances, March 31: Prepaid Property Taxes $4,230 Accounts Payable $4,500 Utilities Payable $1,400 3: More Info Avery's beginning cash balance is $5,500 and Avery desires to maintain a minimum ending cash balance of $5,500. Avery borrows cash as needed at the beginning of each month in increments of $1,000 and repays the amounts borrowed in increments of $1,000 at the beginning of months when excess cash is available. The interest rate on amounts borrowed is 11% per year. Interest is paid at the beginning of the month on the outstanding balance from the previous month. YOU ANSWERED: February 5760 14380 20140 3900 3100 850 4550 18 12418 7722 5500 2222 0 2000 nothing nothing March 7722 13640 21362 3600 4000 850 4550 0 13000 8362 5500 2362 0 0 0 nothing
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Avery Company
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Cash Budget
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January, February, and March
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January
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Beginning cash balance
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$5,500
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Cash receipts
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10,800
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Cash available
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16,300
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Cash payments:
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Purchases of direct materials
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0
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Direct labor
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2,900
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Manufacturing
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3,720
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Selling and administrative expenses
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5,920
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Interest expense
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0
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Total cash payments
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12,540
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Ending cash balance before financing
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3,760
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Minimum cash balance desired
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(5,500)
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Projected cash excess (deficiency)
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(1,740)
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Financing:
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Borrowing
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2,000
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Principal repayments
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0
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Total effects of financing
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2,000
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Ending cash balance
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$5,760
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February
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$5,760
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14,380
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20,140
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3,900
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3,100
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850
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4,550
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18
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12,418
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7,722
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(5,500)
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2,222
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0
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(2,000)
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(2,000)
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$5,722
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March
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$5,722
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13,640
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19,362
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3,600
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4,000
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850
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4,550
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0
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13,000
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6,362
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(5,500)
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862
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0
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0
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0
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$6,362
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Total
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Cash Receipts from Customers
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January
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February
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March
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Total
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Total sales
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$13,500
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$14,600
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$13,400
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$41,500
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January
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February
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March
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Total
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Cash Receipts from Customers:
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January—Cash sales
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$8,100
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January—Credit sales, collection of January sales in January
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2,700
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January—Credit sales, collection of January sales in February
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$2,700
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February—Cash sales
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8,760
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February—Credit sales, collection of February sales in February
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2,920
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February—Credit sales, collection of February sales in March
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$2,920
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March—Cash sales
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8,040
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March—Credit sales, collection of March sales in March
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2,680
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Total cash receipts from customers
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$10,800
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$14,380
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$13,640
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$38,820
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Accounts Receivable balance, March 31:
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March—Credit sales, collection of March sales in April
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$2,680
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January
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February
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March
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Total
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Cash Payments
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Direct Materials:
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Accounts Payable balance, January 1
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$0
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January—Direct material purchases paid in February
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$3,900
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February—Direct material purchases paid in March
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$3,600
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Total payments for direct materials
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0
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3,900
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3,600
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$7,500
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Direct Labor:
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Total payments for direct labor
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2,900
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3,100
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4,000
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10,000
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Manufacturing Overhead:
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Utilities for plant
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850
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850
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1,700
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Property taxes on plant
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3,720
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3,720
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Total payments for manufacturing overhead
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3,720
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850
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850
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5,420
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Selling and Administrative Expenses:
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Utilities for office
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550
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550
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1,100
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Property taxes on office
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1,920
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1,920
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Office salaries
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4,000
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4,000
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4,000
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12,000
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Total payments for Selling and Admin. expenses
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5,920
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4,550
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4,550
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15,020
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Total cash payments
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$12,540
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$12,400
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$13,000
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$37,940
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Acccount balances, March 31:
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Prepaid Property Taxes
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$4,230
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Accounts Payable
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$4,500
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Utilities Payable
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$1,400
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YOU ANSWERED:
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