Cash Budget The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: Cash balance on June 1 is $1,136. Actual sales for April and May are as follows:   April May Cash sales $10,000   $18,000 Credit sales 28,900   35,000 Total sales $38,900   $53,000 Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. Inventory purchases average 72% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. Rent is $5,000 per month. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn’t have access to short-term loans. Required: 1.  Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers. Cash BudgetFor June Beginning cash balance     $   Collections:             Cash sales             Credit sales:                 Current month         $ ×  %                 May credit sales         $ ×  %                 April credit sales         Total cash available       $ Less disbursements:             Inventory purchases:                 Current month         $ ×  %     $           Prior month         $ ×  %             Salaries and wages             Rent             Taxes                 Total cash needs         Excess of cash available over needs       $ 2.  Conceptual Connection: Did the business show a negative cash balance for June?    Check My Work

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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  1. Cash Budget

    The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following:

    1. Cash balance on June 1 is $1,136.
    2. Actual sales for April and May are as follows:
        April May
      Cash sales $10,000   $18,000
      Credit sales 28,900   35,000
      Total sales $38,900   $53,000
    3. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible.
    4. Inventory purchases average 72% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month.
    5. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner.
    6. Rent is $5,000 per month.
    7. Taxes to be paid in June are $6,780.

    The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn’t have access to short-term loans.

    Required:

    1.  Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers.

    Cash Budget
    For June
    Beginning cash balance     $  
    Collections:        
        Cash sales        
        Credit sales:        
            Current month        
    $ ×  %        
            May credit sales        
    $ ×  %        
            April credit sales        
    Total cash available       $
    Less disbursements:        
        Inventory purchases:        
            Current month        
    $ ×  %     $  
            Prior month        
    $ ×  %        
        Salaries and wages        
        Rent        
        Taxes        
            Total cash needs        
    Excess of cash available over needs       $

    2.  Conceptual Connection: Did the business show a negative cash balance for June?
     

  2.  
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