Please answer Cash Budget To prepare a master budget for April, May, and June, management gathers the following information. Sales for March total 20,800 units. Budgeted sales in units follow: April, 20,800; May, 21,600; June, 20,900; and July, 20,800. The product’s selling price is $26.00 per unit and its total product cost is $21.00 per unit. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month’s ending materials inventory to equal 50% of the next month’s direct materials requirements. The March 31 raw materials inventory is 5,360 pounds. The budgeted June 30 ending raw materials inventory is 4,200 pounds. Each finished unit requires 0.50 pound of direct materials. Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s budgeted unit sales. The March 31 finished goods inventory is 16,640 units. Each finished unit requires 0.50 hour of direct labor at a rate of $17 per hour. The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21,100 per month is the only fixed factory overhead item. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager’s monthly salary is $3,200. Monthly general and administrative expenses include $14,000 for administrative salaries and 0.7% monthly interest on the long-term note payable. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). The minimum ending cash balance for all months is $42,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans. Dividends of $12,000 are budgeted to be declared and paid in May. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter. Equipment purchases of $100,000 are budgeted for the last day of June.

Please answer Cash Budget To prepare a master budget for April, May, and June, management gathers the following information. Sales for March total 20,800 units. Budgeted sales in units follow: April, 20,800; May, 21,600; June, 20,900; and July, 20,800. The product’s selling price is $26.00 per unit and its total product cost is $21.00 per unit. Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month’s ending materials inventory to equal 50% of the next month’s direct materials requirements. The March 31 raw materials inventory is 5,360 pounds. The budgeted June 30 ending raw materials inventory is 4,200 pounds. Each finished unit requires 0.50 pound of direct materials. Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s budgeted unit sales. The March 31 finished goods inventory is 16,640 units. Each finished unit requires 0.50 hour of direct labor at a rate of $17 per hour. The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21,100 per month is the only fixed factory overhead item. Sales commissions of 8% of sales are paid in the month of the sales. The sales manager’s monthly salary is $3,200. Monthly general and administrative expenses include $14,000 for administrative salaries and 0.7% monthly interest on the long-term note payable. The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale). All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase). The minimum ending cash balance for all months is $42,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans. Dividends of $12,000 are budgeted to be declared and paid in May. No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter. Equipment purchases of $100,000 are budgeted for the last day of June.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 1Q

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Please answer Cash Budget

To prepare a master budget for April, May, and June, management gathers the following information.

Sales for March total 20,800 units. Budgeted sales in units follow: April, 20,800; May, 21,600; June, 20,900; and July, 20,800. The product’s selling price is $26.00 per unit and its total product cost is $21.00 per unit.
Raw materials inventory consists solely of direct materials that cost $20 per pound. Company policy calls for a given month’s ending materials inventory to equal 50% of the next month’s direct materials requirements. The March 31 raw materials inventory is 5,360 pounds. The budgeted June 30 ending raw materials inventory is 4,200 pounds. Each finished unit requires 0.50 pound of direct materials.
Company policy calls for a given month’s ending finished goods inventory to equal 80% of the next month’s budgeted unit sales. The March 31 finished goods inventory is 16,640 units.
Each finished unit requires 0.50 hour of direct labor at a rate of $17 per hour.
The predetermined variable overhead rate is $3.00 per direct labor hour. Depreciation of $21,100 per month is the only fixed factory overhead item.
Sales commissions of 8% of sales are paid in the month of the sales. The sales manager’s monthly salary is $3,200.
Monthly general and administrative expenses include $14,000 for administrative salaries and 0.7% monthly interest on the long-term note payable.
The company budgets 30% of sales to be for cash and the remaining 70% on credit. Credit sales are collected in full in the month following the sale (no credit sales are collected in the month of sale).
All raw materials purchases are on credit, and accounts payable are solely tied to raw materials purchases. Raw materials purchases are fully paid in the next month (none are paid in the month of purchase).
The minimum ending cash balance for all months is $42,000. If necessary, the company borrows enough cash using a loan to reach the minimum. Loans require an interest payment of 1% at each month-end (before any repayment). If the month-end preliminary cash balance exceeds the minimum, the excess will be used to repay any loans.
Dividends of $12,000 are budgeted to be declared and paid in May.
No cash payments for income taxes are budgeted in the second calendar quarter. Income tax will be assessed at 35% in the quarter and budgeted to be paid in the third calendar quarter.
Equipment purchases of $100,000 are budgeted for the last day of June.

The management of Zigby Manufacturing prepared the following balance sheet for March 31.
ZIGBY MANUFACTURING
Balance Sheet
March 31
Assets
Liabilities and Equity
Cash
$ 42,000 Liabilities
Accounts receivable
$ 211,300
378,560
107,200
349,440
Accounts payable
Loan payable
Long-term note payable
Equity
Raw materials inventory
14,000
500,000
$ 725,300
Finished goods inventory
Equipment
Less: Accumulated depreciation
$ 604,000
152,000
452,000
Common stock
337,000
266,900
Retained earnings
Total liabilities and equity
603,900
Total assets
$ 1,329, 200
$ 1,329, 200
To prepare a master budget for April, May, and June, management gathers the following information.

Cash Budget
April
May
June
Beginning cash balance
Total cash available
Less: Cash payments for:
Total cash payments
Preliminary cash balance
Ending cash balance

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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