**Built-Tight Master Budget Preparation**Built-Tight is preparing its master budget for the quarter ending September 30. The following table shows the budgeted sales and cash payments for product costs during this period:| | July | August | September ||--------------------|-------|--------|-----------|| **Budgeted Sales** | $64,000 | $80,000 | $48,000 || **Budgeted Cash Payments for:** | | | || Direct Materials | 16,160 | 13,440 | 13,760 || Direct Labor | 4,040 | 3,360 | 3,440 || Factory Overhead | 20,200 | 16,800 | 17,200 |**Sales Information:**- 20% of sales are in cash, and 80% are on credit.- All credit sales are collected in the following month.- As of June 30, the balance sheet includes: - $15,000 in cash - $45,000 in accounts receivable - $5,000 in loans payable- A minimum cash balance of $15,000 is required.**Loan and Interest Details:**- Loans are acquired at the end of any month where there's a cash shortage.- The interest rate on loans is 1% per month, calculated on the outstanding balance at the start of the month.- Loan repayments occur at the end of months with excess cash.**Operating Expenses:**- Operating expenses are paid in the month they are incurred and consist of: - Sales commissions: 10% of sales - Office salaries: $4,000 per month - Rent: $6,500 per month**Task:**2. Prepare a cash budget for July, August, and September. Indicate negative balances and loan repayments with a minus sign. Provide the final amounts in whole dollars.**Template for Cash Budget Preparation:****BUILT-TIGHT: Cash Budget for July, August, and September** ### BUILT-TIGHT Cash Budget**For July, August, and September**| | July | August | September ||---|------|--------|-----------|| **Beginning cash balance** | | | || **Total cash available** | | | || **Cash payments for:** | | | || | | | || | | | || | | | || | | | || | | | || **Total cash payments** | | | || **Preliminary cash balance** | | | || **Additional loan from bank** | | | || **Repayment of loan to bank** | | | || **Ending cash balance** | | | |This table is a template used to outline a cash budget for a company over a three-month period. It includes categories for beginning cash balance, total cash available, detailed sections for cash payments, as well as calculations to determine the preliminary cash balance. It also accounts for bank loans and repayments to project the ending cash balance for each month.

Budgeting is a process of estimating future value at the current time and implement the plants as per the budget. Budgeting also helps in comparing the actual results with the budgeted data. Any discrepancy can be analyzed further to improve the same.Formulation:- Computation:-Formulation:- Computation:-Formulation:- Computation:-

Business

Accounting

Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow: July $64,000 $80,000 August September $ 48,000 Budgeted sales Budgeted cash payments for Direct materials 13,440 16,160 4,040 13,760 3,440 17,200 Direct labor 3,360 Factory overhead 20,200 16,800 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month- end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).

Built-Tight is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for product costs for the quarter follow: July $64,000 $80,000 August September $ 48,000 Budgeted sales Budgeted cash payments for Direct materials 13,440 16,160 4,040 13,760 3,440 17,200 Direct labor 3,360 Factory overhead 20,200 16,800 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,000 in accounts receivable; and a $5,000 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month- end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,000 per month), and rent ($6,500 per month).

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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