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Q3. The Alex ple, a merchandising firm, has planned the following sales for the next four months: March $50000 April $70000 May $90000 June S60000 Total budget sales Sales are made 40% for cash and 60% on account. From experience, the company has leamed that a month's sales on account are collected 70% in the month of sale, 20% in the first month following sale, 8% in the second month following sale and 2 % in uncollected. Assume the following budgeted data for June also occurred in cash: | $52000 $10000 |Purchases Selling and administrative expenses Depreciation Equipment purchase | Cash balance, beginning of June $8000 $15000 $6000 Using this data above, prepare a cash budget for the month of June. The company requires a minimum cash balance of $4,000 to start a month. Clearly show any borrowing needed during the month in the budget. No interest will be paid for the loan taken (Show all the calculations).

Q3. The Alex ple, a merchandising firm, has planned the following sales for the next four months: March $50000 April $70000 May $90000 June S60000 Total budget sales Sales are made 40% for cash and 60% on account. From experience, the company has leamed that a month's sales on account are collected 70% in the month of sale, 20% in the first month following sale, 8% in the second month following sale and 2 % in uncollected. Assume the following budgeted data for June also occurred in cash: | $52000 $10000 |Purchases Selling and administrative expenses Depreciation Equipment purchase | Cash balance, beginning of June $8000 $15000 $6000 Using this data above, prepare a cash budget for the month of June. The company requires a minimum cash balance of $4,000 to start a month. Clearly show any borrowing needed during the month in the budget. No interest will be paid for the loan taken (Show all the calculations).

FINANCIAL ACCOUNTING
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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Q3. The Alex ple, a merchandising firm, has planned the following sales for the next four months: March $50000 |May June Total budget sales April $70000 $90000 $60000 Sales are made 40% for cash and 60% on account. From experience, the company has learmed that a month's sales on account are collected 70% in the month of sale, 20% in the first month following sale, 8% in the second month following sale and 2 % in uncollected. Assume the following budgeted data for June also occurred in cash: Purchases Selling and administrative expenses Depreciation Equipment purchase Cash balance, beginning of June $52000 $10000 $8000 $15000 | $6000 Using this data above, prepare a cash budget for the month of June. The company requires a minimum cash balance of $4,000 to start a month. Clearly show any borrowing needed during the month in the budget. No interest will be paid for the loan taken (Show all the calculations).
Transcribed Image Text:Q3. The Alex ple, a merchandising firm, has planned the following sales for the next four months: March $50000 |May June Total budget sales April $70000 $90000 $60000 Sales are made 40% for cash and 60% on account. From experience, the company has learmed that a month's sales on account are collected 70% in the month of sale, 20% in the first month following sale, 8% in the second month following sale and 2 % in uncollected. Assume the following budgeted data for June also occurred in cash: Purchases Selling and administrative expenses Depreciation Equipment purchase Cash balance, beginning of June $52000 $10000 $8000 $15000 | $6000 Using this data above, prepare a cash budget for the month of June. The company requires a minimum cash balance of $4,000 to start a month. Clearly show any borrowing needed during the month in the budget. No interest will be paid for the loan taken (Show all the calculations).
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