Cash Budget LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: a. Cash balance on October 1 is $1,120. b. Actual sales for August and September are as follows: August September $4,500 61,000 $65,500 Cash sales Credit sales Total sales $6,000 59,000 $65,000 c. Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. d. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month, e. Salaries and wages total $3,850 per month. f. Rent is $3,150 per month. g. Taxes to be paid in October are $1,635. h. LeeAnn usually withdraws $3,500 each month as her salary. 1. Advertising is $1,500 per month. j. Other operating expenses total $3,800 per month. k. Internet and telephone fees are $340 per month. LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $63,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance. Required: Pronoro.o.cach hudent for October Inchide.m tinn.echodulee.fos.cach llections.and.cach.naumento Dound your intermadi Dequeus
Cash Budget LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following: a. Cash balance on October 1 is $1,120. b. Actual sales for August and September are as follows: August September $4,500 61,000 $65,500 Cash sales Credit sales Total sales $6,000 59,000 $65,000 c. Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible. d. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month, e. Salaries and wages total $3,850 per month. f. Rent is $3,150 per month. g. Taxes to be paid in October are $1,635. h. LeeAnn usually withdraws $3,500 each month as her salary. 1. Advertising is $1,500 per month. j. Other operating expenses total $3,800 per month. k. Internet and telephone fees are $340 per month. LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $63,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance. Required: Pronoro.o.cach hudent for October Inchide.m tinn.echodulee.fos.cach llections.and.cach.naumento Dound your intermadi Dequeus
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.
Question
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Transcribed Image Text:4.3 Unit Homework
Cash Budget
LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After
examining the records of the company, you find the following:
a. Cash balance on October 1 is $1,120.
b. Actual sales for August and September are as follows:
August
September
$6,000
$4,500
59,000
61,000
$65,000
$65,500
Cash sales
Credit sales
Total sales
c. Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent
in the second month after the sale. The remaining sales are uncollectible.
d. Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of
purchase. The remaining 55 percent are paid for in the following month.
e. Salaries and wages total $3,850 per month.
f. Rent is $3,150 per month.
g. Taxes to be paid in October are $1,635.
h. LeeAnn usually withdraws $3,500 each month as her salary.
1. Advertising is $1,500 per month.
j. Other operating expenses total $3,800 per month.
k. Internet and telephone fees are $340 per month,
LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $63,000 for October. She likes to have $3,000 on hand at
the end of the month and is concerned about the potential October ending balance.
Required:
Dennaro, each budget for October Includ
M
for
Dound your intermadista
Provintie
Navt
Transcribed Image Text:3.3 Unit Homework
Required:
Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate
computations and final answers to the nearest dollar.
Wooster Sporting Goods Store
Cash Budget
For the Month of October
Beginning cash balance
Collections:
Cash sales
Credit sales:
October
September
August
Total cash available
Disbursements:
Inventory purchases:
October
September
Salaries and wages
Rent
Taxes:
Other operating expenses
4.3 Unit Homework
October
September
August
Total cash available
Disbursements:
Inventory purchases:
October
September
Salaries and wages
Rent
Taxes
Other operating expenses
Owner withdrawal
Advertising
Internet and telephone
Ending cash balance
E
A
Explain how each of the four data analytic types-descriptive, diagnostic, predictive, or prescriptive-can be used in LeeAnn's
budgeting process. (See Exhibits 2.5 and 2.6, for a review of data analytic types.)
The cash budget is used both
to describe what is expected given LeeAnn's assumptions.
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