**Preparing a Monthly Cash Budget for Mercury Shoes Inc.**The controller of Mercury Shoes Inc. has instructed the preparation of a monthly cash budget for the upcoming three months. The following budget information is provided:**Budget Information:**| Sales/Costs | April | May | June ||-------------------------|----------|----------|----------|| Sales | $150,000 | $175,000 | $195,000 || Manufacturing costs | 66,000 | 87,000 | 115,000 || Selling and admin. expenses | 40,000 | 46,000 | 51,000 || Capital expenses | 0 | 0 | 120,000 |**Narrative Explanation:**The company projects that approximately 15% of its merchandise will be sold for cash. For sales on account, 70% are expected to be collected in the month following the sale, with the remaining 30% collected in the subsequent month (two months after the sale). Depreciation, insurance, and property tax expenses constitute $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in December, and property taxes are paid in September. Remaining manufacturing costs are paid as follows: 80% in the month incurred, with the rest paid the following month.As of April 1, current assets consist of $42,000 in cash, $25,000 in marketable securities, and $198,000 in accounts receivable from sales in March and February. February and March sales were $120,000 and $150,000, respectively. Current liabilities include $14,000 in accounts payable from March manufacturing costs. Selling and administrative expenses are paid in the period they occur. An estimated income tax payment of $24,000 is due in May.Additionally, the regular quarterly dividend of $15,000 is expected to be declared in May and paid in June. Management wishes to maintain a minimum cash balance of $40,000.**Required Tasks:**a. Prepare a monthly cash budget and supporting schedules for April, May, and June.b. Based on the budget from part (a), provide recommendations to the controller.

Cash budget A cash budget is an estimate of a company's cash inflows and expenditures over a…

The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales Sales/Costs Manufacturing costs Selling and admin. expenses Capital expenses April $150,000 66,000 40,000 0 May $175,000 87,000 46,000 0 June $195,000 115,000 51,000 120,000 The company expects to sell about 15% 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 after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in December, and the

The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: Sales Sales/Costs Manufacturing costs Selling and admin. expenses Capital expenses April $150,000 66,000 40,000 0 May $175,000 87,000 46,000 0 June $195,000 115,000 51,000 120,000 The company expects to sell about 15% 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 after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in December, and the

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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