Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next three months follow. Budgeted Sales Cash payments for merchandise purchases Cash receipts from Total cash receipts $ 26,400 22,220 18,480 18,920 Sales are 50% cash and 50% on credit. Sales in March were $26,400. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $13,200 in cash and $2,200 in loans payable. A minimum cash balance of $13,200 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $13,200. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $13,200 at month-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (2% of sales), office salaries ($5,500 per month), and rent ($3,300 per month). (a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) CASTOR INCORPORATED Schedule of Cash Receipts from Sales April May $ 35,200 $ 44,000 Beginning cash balance 0 $ CASTOR, INCORPORATED Cash Budget April Total cash available Less: Cash payments for: April Total cash payments Preliminary cash balance Ending cash balance $ 35,200 Loan balance - Beginning of month $ Additional loan (loan repayment) Loan balance - End of month Loan balance April $ 2,200 $ 44,000 0 May May May June 0 $ 0 June $26,400 June June 0 0
Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for the next three months follow. Budgeted Sales Cash payments for merchandise purchases Cash receipts from Total cash receipts $ 26,400 22,220 18,480 18,920 Sales are 50% cash and 50% on credit. Sales in March were $26,400. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $13,200 in cash and $2,200 in loans payable. A minimum cash balance of $13,200 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $13,200. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If a preliminary cash balance above $13,200 at month-end exists, loans are repaid from the excess. Expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (2% of sales), office salaries ($5,500 per month), and rent ($3,300 per month). (a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) CASTOR INCORPORATED Schedule of Cash Receipts from Sales April May $ 35,200 $ 44,000 Beginning cash balance 0 $ CASTOR, INCORPORATED Cash Budget April Total cash available Less: Cash payments for: April Total cash payments Preliminary cash balance Ending cash balance $ 35,200 Loan balance - Beginning of month $ Additional loan (loan repayment) Loan balance - End of month Loan balance April $ 2,200 $ 44,000 0 May May May June 0 $ 0 June $26,400 June June 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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:Castor Incorporated is preparing its master budget. Budgeted sales and cash payments for merchandise purchases for
the next three months follow.
April
$
$
35,200
26,400
22,220
18,480
18,920
Sales are 50% cash and 50% on credit. Sales in March were $26,400. All credit sales are collected in the month
following the sale. The March 31 balance sheet includes balances of $13,200 in cash and $2,200 in loans payable. A
minimum cash balance of $13,200 is required. Loans are obtained at the end of any month when the preliminary cash
balance is below $13,200. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at
each month-end. If a preliminary cash balance above $13,200 at month-end exists, loans are repaid from the excess.
Expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (2% of sales), office
salaries ($5,500 per month), and rent ($3,300 per month).
Budgeted
Sales
Cash payments for
merchandise purchases
Cash receipts from
(a) Prepare a schedule of cash receipts from sales for April, May, and June. (b) Prepare a cash budget for each of April,
May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.
Round your final answers to the nearest whole dollar.)
CASTOR INCORPORATED
Schedule of Cash Receipts from Sales
April May
$ 35,200 $ 44,000
Total cash receipts
0 $
CASTOR, INCORPORATED
Cash Budget
April
Beginning cash balance
Total cash available
Less: Cash payments for:
Total cash payments
Preliminary cash balance
Ending cash balance
Loan balance - Beginning of
month
$
Loan balance
April
$ 2,200
Additional loan (loan
repayment)
Loan balance - End of month
0
$
44,000
May
May
May
June
0 $
0
June
$26,400
June
June
0
0
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