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: Cash balance on October 1 is $1,120. Actual sales for August and September are as follows:     August   September Cash sales   $6,000       $4,500     Credit sales   57,000       61,000         Total sales   $63,000       $65,500     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. 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. Salaries and wages total $3,850 per month. Rent is $3,150 per month. Taxes to be paid in October are $1,635. LeeAnn usually withdraws $3,500 each month as her salary. Advertising is $1,500 per month. Other operating expenses total $3,800 per month. Internet and telephone fees are $320 per month. LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $64,000 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: 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. Beginning cash balance $fill in the blank 7e5bce06d043015_1   Collections:     Cash sales fill in the blank 7e5bce06d043015_2   Credit sales:     October fill in the blank 7e5bce06d043015_3   September fill in the blank 7e5bce06d043015_4   August fill in the blank 7e5bce06d043015_5   Total cash available   $fill in the blank 7e5bce06d043015_6 Disbursements:     Inventory purchases:     October $fill in the blank 7e5bce06d043015_7   September fill in the blank 7e5bce06d043015_8   Salaries and wages fill in the blank 7e5bce06d043015_9   Rent fill in the blank 7e5bce06d043015_10   Taxes fill in the blank 7e5bce06d043015_11   Other operating expenses fill in the blank 7e5bce06d043015_12   Owner withdrawal fill in the blank 7e5bce06d043015_13   Advertising fill in the blank 7e5bce06d043015_14   Internet and telephone fill in the blank 7e5bce06d043015_15 fill in the blank 7e5bce06d043015_16 Ending cash balance

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:

  1. Cash balance on October 1 is $1,120.
  2. Actual sales for August and September are as follows:
        August   September
    Cash sales   $6,000       $4,500    
    Credit sales   57,000       61,000    
        Total sales   $63,000       $65,500    
  3. 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.
  4. 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.
  5. Salaries and wages total $3,850 per month.
  6. Rent is $3,150 per month.
  7. Taxes to be paid in October are $1,635.
  8. LeeAnn usually withdraws $3,500 each month as her salary.
  9. Advertising is $1,500 per month.
  10. Other operating expenses total $3,800 per month.
  11. Internet and telephone fees are $320 per month.

LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $64,000 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:

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.

Beginning cash balance $fill in the blank 7e5bce06d043015_1  
Collections:    
Cash sales fill in the blank 7e5bce06d043015_2  
Credit sales:    
October fill in the blank 7e5bce06d043015_3  
September fill in the blank 7e5bce06d043015_4  
August fill in the blank 7e5bce06d043015_5  
Total cash available   $fill in the blank 7e5bce06d043015_6
Disbursements:    
Inventory purchases:    
October $fill in the blank 7e5bce06d043015_7  
September fill in the blank 7e5bce06d043015_8  
Salaries and wages fill in the blank 7e5bce06d043015_9  
Rent fill in the blank 7e5bce06d043015_10  
Taxes fill in the blank 7e5bce06d043015_11  
Other operating expenses fill in the blank 7e5bce06d043015_12  
Owner withdrawal fill in the blank 7e5bce06d043015_13  
Advertising fill in the blank 7e5bce06d043015_14  
Internet and telephone fill in the blank 7e5bce06d043015_15 fill in the blank 7e5bce06d043015_16
Ending cash balance
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