Built-Tight is preparing its master budget. Budgeted sales and cash payments follow: September $ 55,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Overhead July $ 57,000 August $ 73,000 15,760 13,040 3,640 2,960 19,800 16,400 Sales to customers are 20% cash and 80% on credit. Sales in June were $54,500. All credit sales are 13,360 3,040 16,800
Built-Tight is preparing its master budget. Budgeted sales and cash payments follow: September $ 55,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Overhead July $ 57,000 August $ 73,000 15,760 13,040 3,640 2,960 19,800 16,400 Sales to customers are 20% cash and 80% on credit. Sales in June were $54,500. All credit sales are 13,360 3,040 16,800
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Built-Tight is preparing its master budget. Budgeted sales and cash payments follow:
Budgeted sales
Budgeted cash payments for
Direct materials
Direct labor
Overhead
Beginning cash balance
Total cash available
Less: Cash payments for
Total cash payments
Preliminary cash balance
Loan activity
Additional loan
Repayment of loan to bank
Ending cash balance
Sales to customers are 20% cash and 80% on credit. Sales in June were $54,500. All credit sales are collected in the
month following the sale. The June 30 balance sheet includes balances of $43,000 in cash and $4,600 in loans payable.
A minimum cash balance of $43,000 is required. Loans are obtained at the end of any month when the preliminary cash
balance is below $43,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each
month-end. Any preliminary cash balance above $43,000 is used to repay loans at month-end. Expenses are paid in the
month incurred and consist of sales commissions (10% of sales), office salaries ($3,600 per month), and rent ($6,100 per
month).
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
July
$ 57,000
2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any)
should be indicated with minus sign. Enter your final answers in whole dollars.)
BUILT-TIGHT
Cash Budget
July
15,760
3,640
19,800
Loan balance
July
August
$ 73,000
August
13,040
2,960
16,400
August
September
$ 55,000
13,360
3,040
16,800
September
September](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4f532a2d-41c4-4378-bc40-36a341559f3a%2F68219b81-34b8-42fc-a784-14f5a3b918f6%2F94qe6os_processed.png&w=3840&q=75)
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Required information
[The following information applies to the questions displayed below.]
Built-Tight is preparing its master budget. Budgeted sales and cash payments follow:
Budgeted sales
Budgeted cash payments for
Direct materials
Direct labor
Overhead
Beginning cash balance
Total cash available
Less: Cash payments for
Total cash payments
Preliminary cash balance
Loan activity
Additional loan
Repayment of loan to bank
Ending cash balance
Sales to customers are 20% cash and 80% on credit. Sales in June were $54,500. All credit sales are collected in the
month following the sale. The June 30 balance sheet includes balances of $43,000 in cash and $4,600 in loans payable.
A minimum cash balance of $43,000 is required. Loans are obtained at the end of any month when the preliminary cash
balance is below $43,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each
month-end. Any preliminary cash balance above $43,000 is used to repay loans at month-end. Expenses are paid in the
month incurred and consist of sales commissions (10% of sales), office salaries ($3,600 per month), and rent ($6,100 per
month).
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
July
$ 57,000
2. Prepare a cash budget for the months of July, August, and September. (Negative balances and Loan repayment amounts (if any)
should be indicated with minus sign. Enter your final answers in whole dollars.)
BUILT-TIGHT
Cash Budget
July
15,760
3,640
19,800
Loan balance
July
August
$ 73,000
August
13,040
2,960
16,400
August
September
$ 55,000
13,360
3,040
16,800
September
September
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