**Instruction:**1. Prepare a cash receipts budget for July, August, and September.---**Table: Cash Receipts Budget**Title: BUILT-TIGHT**For July, August, and September**| | July | August | September ||--------------------------|------|--------|-----------|| Less: Ending accounts receivable | | | || Cash receipts from: | | | || | | | || | | | || **Total cash receipts** | | | |---**Explanation:**This table is designed to track the cash receipts for the company "BUILT-TIGHT" over three months: July, August, and September. It helps in planning and monitoring cash inflow, excluding ending accounts receivable, and lists the sources of cash receipts. The bottom of the table calculates the total cash received each month. **Master Budget Preparation for Built-Tight****Quarter Ending September 30**Built-Tight is preparing its master budget for the quarter ending September 30. Below are the budgeted sales and cash payments for product costs for the quarter:**Budgeted Sales and Cash Payments**- **July** - Sales: $64,000 - Cash Payments for Direct Materials: $16,160 - Direct Labor: $4,040 - Factory Overhead: $20,200 - **August** - Sales: $80,000 - Cash Payments for Direct Materials: $13,440 - Direct Labor: $3,360 - Factory Overhead: $16,800 - **September** - Sales: $48,000 - Cash Payments for Direct Materials: $13,760 - Direct Labor: $3,440 - Factory Overhead: $17,200**Sales Information**- 20% of sales are made in cash.- 80% of sales are made on credit, collected in the month following the sale.**Financial Policy**- Minimum cash balance required: $15,000.- Loans are obtained at the end of each month when cash shortages occur.- Interest on loans is 1% per month, calculated on the beginning-of-the-month balance.- Excess cash is used to repay loans each month.**Operating Expenses**- Operating expenses are paid in the month they are incurred.- Components include: - Sales Commissions: 10% of sales - Office Salaries: $4,000 per month - Rent: $6,500 per month**Initial Financial Balances as of June 30**- Cash Balance: $15,000- Accounts Receivable: $45,000- Loans Payable: $5,000**Task**1. Prepare a cash receipts budget for July, August, and September.This detailed breakdown aids in understanding the financial planning and cash flow management necessary for Built-Tight to operate smoothly over the specified quarter.

Budgeting: It is a process of planning the work to be performed. Under this process a formal plan is…

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 16,160 4,040 20,200 13,440 3,360 16,800 13,760 3,440 17,200 Direct labor Factory overhead 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 16,160 4,040 20,200 13,440 3,360 16,800 13,760 3,440 17,200 Direct labor Factory overhead 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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