Flounder, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: July August June July August $139,000 $129,000 $ 95,000 98,000 254,000 $237,000 $383.000 $ 295,000 (a) 200,000 $300.000 222.000 102.000 Other cash disbursements budgeted: (a) selling and administrative expenses of $51.000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $34,000 cash The company's policy is to maintain a minimum cash balance of $50.000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50.000. Assume that borrowed money in this case is for one month.
Flounder, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: July August June July August $139,000 $129,000 $ 95,000 98,000 254,000 $237,000 $383.000 $ 295,000 (a) 200,000 $300.000 222.000 102.000 Other cash disbursements budgeted: (a) selling and administrative expenses of $51.000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $34,000 cash The company's policy is to maintain a minimum cash balance of $50.000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50.000. Assume that borrowed money in this case is for one month.
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
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Chapter9: Profit Planning And Flexible Budgets
Section: Chapter Questions
Problem 45BEB: Pilsner Inc. purchases raw materials on account for use in production. The direct materials...
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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:Prepare a cash budget for the months of July and August. (Do not leave any answer field blank. Enter O for amounts.)
Beginning Cash Balance
Add V : Receipts
Collections from Customers
Cash Sales
Total Receipts
Total Available Cash
Less V :
Selling and Administrative Expenses
Purchases
Repavments
Equipment Purchase
Disbursements
Total Disbursements
Excess (deficiency) of available cash over disbursements
Financing
Borrowings
Repayments
Ending Cash Balance
FLOUNDER, INC.
Cash Budget
For the Two Months of July and August
$
$
July
50,000
133,000
254,000
437,000
51,000
417,000
20,000
30,000
50,000
August
50,000
108,600
200,000
358,600
51,000
34,000
i
i
-30,150
i
247,000 i
111,6000
0
i
81,450
Transcribed Image Text:Flounder, Inc. has budgeted sales revenues as follows:
Credit sales
Cash sales
Total sales
June
July
August
(a)
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% is paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows:
Credit sales
June
July
June
$139,000
98,000
August
Your answer is correct.
Other cash disbursements budgeted: (a) selling and administrative expenses of $51,000 each month, (b) dividends of $105,000 will be paid in July, and (c) purchase of equipment in August for $34,000 cash.
The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month.
$300,000
June
222,000
July
$237,000 $383,000 $ 295,000
102,000
Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory. (Do not leave any answer field blank. Enter O for amounts.)
August
Total collections
Inventory purchases
July
$129,000
254,000
Schedule of Expected Collections from Customers
$
Total payments
$
August
$ 95,000
200,000
$
$
July
55,600
77,400
0
Schedule of Expected Payments for Purchases of Inventory.
July
133,000
150,000
111,000
0
$
261,000
$
August
$
August
0
51,600
57,000
108,600
0
111,000
51,000
162,000
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