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).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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