The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $121,000 $146,000 $200,000 Manufacturing costs 51,000 63,000 72,000 Selling and administrative expenses 42,000 44,000 76,000 Capital expenditures _ _ 48,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $46,000, marketable securities of $65,000, and accounts receivable of $135,100 ($29,100 from July sales and $106,000 from August sales). Sales on account for July and August were $97,000 and $106,000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport’s regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $45,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations. Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 September October November Estimated cash receipts from: Cash sales $fill in the blank 46ff89091ffbff4_2 $fill in the blank 46ff89091ffbff4_3 $fill in the blank 46ff89091ffbff4_4 Collection of accounts receivable fill in the blank 46ff89091ffbff4_6 fill in the blank 46ff89091ffbff4_7 fill in the blank 46ff89091ffbff4_8 Total cash receipts $fill in the blank 46ff89091ffbff4_9 $fill in the blank 46ff89091ffbff4_10 $fill in the blank 46ff89091ffbff4_11 Less estimated cash payments for: Manufacturing costs $fill in the blank 46ff89091ffbff4_13 $fill in the blank 46ff89091ffbff4_14 $fill in the blank 46ff89091ffbff4_15 Selling and administrative expenses fill in the blank 46ff89091ffbff4_17 fill in the blank 46ff89091ffbff4_18 fill in the blank 46ff89091ffbff4_19 Capital expenditures fill in the blank 46ff89091ffbff4_21 Other purposes: Income tax fill in the blank 46ff89091ffbff4_23 Dividends fill in the blank 46ff89091ffbff4_25 Total cash payments $fill in the blank 46ff89091ffbff4_26 $fill in the blank 46ff89091ffbff4_27 $fill in the blank 46ff89091ffbff4_28 Cash increase or (decrease) $fill in the blank 46ff89091ffbff4_30 $fill in the blank 46ff89091ffbff4_31 fill in the blank 46ff89091ffbff4_32 Plus cash balance at beginning of month fill in the blank 46ff89091ffbff4_34 fill in the blank 46ff89091ffbff4_35 fill in the blank 46ff89091ffbff4_36 Cash balance at end of month $fill in the blank 46ff89091ffbff4_37 $fill in the blank 46ff89091ffbff4_38 $fill in the blank 46ff89091ffbff4_39 Less minimum cash balance fill in the blank 46ff89091ffbff4_41 fill in the blank 46ff89091ffbff4_42 fill in the blank 46ff89091ffbff4_43 Excess or (deficiency) $fill in the blank 46ff89091ffbff4_44 $fill in the blank 46ff89091ffbff4_45 $fill in the blank 46ff89091ffbff4_46

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $121,000 $146,000 $200,000 Manufacturing costs 51,000 63,000 72,000 Selling and administrative expenses 42,000 44,000 76,000 Capital expenditures _ _ 48,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of $46,000, marketable securities of $65,000, and accounts receivable of $135,100 ($29,100 from July sales and $106,000 from August sales). Sales on account for July and August were $97,000 and $106,000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport’s regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $45,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations. Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 September October November Estimated cash receipts from: Cash sales $fill in the blank 46ff89091ffbff4_2 $fill in the blank 46ff89091ffbff4_3 $fill in the blank 46ff89091ffbff4_4 Collection of accounts receivable fill in the blank 46ff89091ffbff4_6 fill in the blank 46ff89091ffbff4_7 fill in the blank 46ff89091ffbff4_8 Total cash receipts $fill in the blank 46ff89091ffbff4_9 $fill in the blank 46ff89091ffbff4_10 $fill in the blank 46ff89091ffbff4_11 Less estimated cash payments for: Manufacturing costs $fill in the blank 46ff89091ffbff4_13 $fill in the blank 46ff89091ffbff4_14 $fill in the blank 46ff89091ffbff4_15 Selling and administrative expenses fill in the blank 46ff89091ffbff4_17 fill in the blank 46ff89091ffbff4_18 fill in the blank 46ff89091ffbff4_19 Capital expenditures fill in the blank 46ff89091ffbff4_21 Other purposes: Income tax fill in the blank 46ff89091ffbff4_23 Dividends fill in the blank 46ff89091ffbff4_25 Total cash payments $fill in the blank 46ff89091ffbff4_26 $fill in the blank 46ff89091ffbff4_27 $fill in the blank 46ff89091ffbff4_28 Cash increase or (decrease) $fill in the blank 46ff89091ffbff4_30 $fill in the blank 46ff89091ffbff4_31 fill in the blank 46ff89091ffbff4_32 Plus cash balance at beginning of month fill in the blank 46ff89091ffbff4_34 fill in the blank 46ff89091ffbff4_35 fill in the blank 46ff89091ffbff4_36 Cash balance at end of month $fill in the blank 46ff89091ffbff4_37 $fill in the blank 46ff89091ffbff4_38 $fill in the blank 46ff89091ffbff4_39 Less minimum cash balance fill in the blank 46ff89091ffbff4_41 fill in the blank 46ff89091ffbff4_42 fill in the blank 46ff89091ffbff4_43 Excess or (deficiency) $fill in the blank 46ff89091ffbff4_44 $fill in the blank 46ff89091ffbff4_45 $fill in the blank 46ff89091ffbff4_46

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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Question

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	September	October	November
Sales	$121,000		$146,000	$200,000
Manufacturing costs	51,000		63,000	72,000
Selling and administrative expenses	42,000		44,000	76,000
Capital expenditures	_		_	48,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month.

Current assets as of September 1 include cash of $46,000, marketable securities of $65,000, and accounts receivable of $135,100 ($29,100 from July sales and $106,000 from August sales). Sales on account for July and August were $97,000 and $106,000, respectively. Current liabilities as of September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport’s regular quarterly dividend of $10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $45,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.

Bridgeport Housewares Inc.
Cash Budget
For the Three Months Ending November 30
	September	October	November
Estimated cash receipts from:
Cash sales	$fill in the blank 46ff89091ffbff4_2	$fill in the blank 46ff89091ffbff4_3	$fill in the blank 46ff89091ffbff4_4
Collection of accounts receivable	fill in the blank 46ff89091ffbff4_6	fill in the blank 46ff89091ffbff4_7	fill in the blank 46ff89091ffbff4_8
Total cash receipts	$fill in the blank 46ff89091ffbff4_9	$fill in the blank 46ff89091ffbff4_10	$fill in the blank 46ff89091ffbff4_11
Less estimated cash payments for:
Manufacturing costs	$fill in the blank 46ff89091ffbff4_13	$fill in the blank 46ff89091ffbff4_14	$fill in the blank 46ff89091ffbff4_15
Selling and administrative expenses	fill in the blank 46ff89091ffbff4_17	fill in the blank 46ff89091ffbff4_18	fill in the blank 46ff89091ffbff4_19
Capital expenditures			fill in the blank 46ff89091ffbff4_21
Other purposes:
Income tax		fill in the blank 46ff89091ffbff4_23
Dividends			fill in the blank 46ff89091ffbff4_25
Total cash payments	$fill in the blank 46ff89091ffbff4_26	$fill in the blank 46ff89091ffbff4_27	$fill in the blank 46ff89091ffbff4_28
Cash increase or (decrease)	$fill in the blank 46ff89091ffbff4_30	$fill in the blank 46ff89091ffbff4_31	fill in the blank 46ff89091ffbff4_32
Plus cash balance at beginning of month	fill in the blank 46ff89091ffbff4_34	fill in the blank 46ff89091ffbff4_35	fill in the blank 46ff89091ffbff4_36
Cash balance at end of month	$fill in the blank 46ff89091ffbff4_37	$fill in the blank 46ff89091ffbff4_38	$fill in the blank 46ff89091ffbff4_39
Less minimum cash balance	fill in the blank 46ff89091ffbff4_41	fill in the blank 46ff89091ffbff4_42	fill in the blank 46ff89091ffbff4_43
Excess or (deficiency)	$fill in the blank 46ff89091ffbff4_44	$fill in the blank 46ff89091ffbff4_45	$fill in the blank 46ff89091ffbff4_46

Cash Budget
The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the
following budget information:
September october November
Sales
$121,000 $146,000 $200,000
Manufacturing costs
51,000
63,000
72,000
Selling and administrative
42,000
44,000
76,000
expenses
Capital expenditures
48,000
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the
sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $10,000 of
the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of
the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following
month.
Current assets as of September 1 include cash of $46,000, marketable securities of $65,000, and accounts receivable of $135,100 ($29,100 from July
sales and $106,000 from August sales). Sales on account for July and August were $97,000 and $106,000, respectively. Current liabilities as of
September 1 include $10,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash
in the period they are incurred. An estimated income tax payment of $18,000 will be made in October. Bridgeport's regular quarterly dividend of
$10,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $45,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest
calculations.

1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest
calculations.
Bridgeport Housewares Inc.
Cash Budget
For the Three Months Ending November 30
September
October
November
Estimated cash receipts from:
Cash sales
Collection of accounts receivable
12,100
14,600
20,000
Total cash receipts
Less estimated cash payments for:
Manufacturing costs
Selling and administrative expenses
Capital expenditures
Other purposes:
Income tax
Dividends
Total cash payments
Cash increase or (decrease)
Plus cash balance at beginning of month
Cash balance at end of month
Less minimum cash balance
Excess or (deficiency)
%24
%24

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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