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 $109,000 $141,000 $180,000 Manufacturing costs 46,000 61,000 65,000 Selling and administrative 38,000 42,000 68,000 expenses Capital expenditures 43,000 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 $6,000 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 $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($26,100 from July sales and $95,000 from August sales). Sales on account for July and August were $87,000 and $95,000, respectively. Current liabilities as of September 1 include $6,000 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 $17,000 will be made in October. Bridgeport's regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $40,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.
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 $109,000 $141,000 $180,000 Manufacturing costs 46,000 61,000 65,000 Selling and administrative 38,000 42,000 68,000 expenses Capital expenditures 43,000 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 $6,000 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 $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($26,100 from July sales and $95,000 from August sales). Sales on account for July and August were $87,000 and $95,000, respectively. Current liabilities as of September 1 include $6,000 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 $17,000 will be made in October. Bridgeport's regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $40,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
Collection of accounts receivable
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
2$
Less minimum cash balance
Excess or (deficiency)
%24
Transcribed Image Text: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
$109,000
$141,000
$180,000
Manufacturing costs
46,000
61,000
65,000
Selling and administrative
38,000
42,000
68,000
expenses
Capital expenditures
43,000
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 $6,000 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 $41,000, marketable securities of $59,000, and accounts receivable of $121,100 ($26,100 from July sales and $95,000 from August sales). Sales on account
for July and August were $87,000 and $95,000, respectively. Current liabilities as of September 1 include $6,000 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 $17,000 will be made in October. Bridgeport's regular quarterly dividend of $6,000 is expected to be declared in
October and paid in November. Management desires to maintain a minimum cash balance of $40,000.
Required:
1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations.
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