GIVEN ONLY: ABD Enterprises had sales of PHP2,500,000 in March and Php 3,000,000 in April. Forecast sales for May, June and July are PHP3,500,000, PHP4,000,000, and PHP5,000,000, respectively. The firm has a cash balance bf PHP250,000 on May 1 and wishes to maintain a minimum cash balance of PHP250,000. Other information are as follows: GIVEN ONLY: 1. The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following the sale. 2. The firm receives other income of PhP100,000 per month 3. The firm's actual or expected purchases, all made for cash, are Php 2,500,000, Php3,500,000, and Php4,000,000 for the months of May through July, respectively. 4. Rent is PhP150,000 per month 5. Wages and salaries are 10% of the previous month's sales. 6. Cash dividends of Php 150,000 will be paid in June 7. Payment of principal and interest of Php 200,000 is due in June. 8. A cash purchase of equipment costing Php 300,00 is scheduled on July 9. Taxes of Php 300,000 are due in June. QUESTION: Prepare and interpret a cash budget for the months of May, June, and July.

GIVEN ONLY: ABD Enterprises had sales of PHP2,500,000 in March and Php 3,000,000 in April. Forecast sales for May, June and July are PHP3,500,000, PHP4,000,000, and PHP5,000,000, respectively. The firm has a cash balance bf PHP250,000 on May 1 and wishes to maintain a minimum cash balance of PHP250,000. Other information are as follows: GIVEN ONLY: 1. The firm makes 20% of sales for cash, 60% are collected in the next month, and the remaining 20% are collected in the second month following the sale. 2. The firm receives other income of PhP100,000 per month 3. The firm's actual or expected purchases, all made for cash, are Php 2,500,000, Php3,500,000, and Php4,000,000 for the months of May through July, respectively. 4. Rent is PhP150,000 per month 5. Wages and salaries are 10% of the previous month's sales. 6. Cash dividends of Php 150,000 will be paid in June 7. Payment of principal and interest of Php 200,000 is due in June. 8. A cash purchase of equipment costing Php 300,00 is scheduled on July 9. Taxes of Php 300,000 are due in June. QUESTION: Prepare and interpret a cash budget for the months of May, June, and July.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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