Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $135,000 $162,000 $225,000 Manufacturing costs 57,000 70,000 81,000 Selling and administrative 47,000 49,000 86,000 expenses Capital expenditures 54,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($32,400 from July sales and $118,000 from August sales). Sales on account for July and August were $108,000 and $118.000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $19,000 will be made in October. Bridgeport's regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September October, and November Assume 360 days per year for interest
Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $135,000 $162,000 $225,000 Manufacturing costs 57,000 70,000 81,000 Selling and administrative 47,000 49,000 86,000 expenses Capital expenditures 54,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($32,400 from July sales and $118,000 from August sales). Sales on account for July and August were $108,000 and $118.000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $19,000 will be made in October. Bridgeport's regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September October, and November Assume 360 days per year for interest
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
Transcribed Image Text:Cash Budget
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the
following budget information:
September October November
Sales
$135,000
$162,000
$225,000
Manufacturing costs
57,000
70,000
81,000
Selling and administrative
47,000
49,000
86,000
expenses
Capital expenditures
54,000
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following
the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000
of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in
December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the
following month.
Current assets as of September 1 include cash of $51,000, marketable securities of $73,000, and accounts receivable of $150,400 ($32,400 from July
sales and $118,000 from August sales). Sales on account for July and August were $108,000 and $118.000, respectively. Current liabilities as of,
September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in ash
in the period they are incurred. An estimated income tax payment of $19.000 will be made in October. Bridgeport's regular quarterly dividend of
$10,000 is expected to be declared inOctober and paid in November. Management desires to maintain a minimum cash balance of s50,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for September, October, and November Assume 360 days per vear for interest
Transcribed Image Text:1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.
Bridgeport Housewares Inc.
Cash Budget
For the Three Months Ending November 30
September
October
November
Estimated cash receipts from:
13,500 V S
16,200
22,500
Cash sales
Collection of accounts receivable
Total cash receipts
Less estimated cash payments for:
Manufacturing costs
Selling and administrative expenses
Capital expenditures
Other purposes
Income tax
Dividends
Total cash peyments,
Cash increase or (decrease)
Plus cash balance at beginning of month
Cash balance at end of month
Less minimum cash balance
Excess or (oeficiency)
Teeibocs
%24
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