The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bud- get for the next three months. You are presented with the following budget information: Sales. Manufacturing costs.. Selling and administrative expenses. Capital expenditures. May $86,000 34,000 15,000 June July $90,000 $95,000 39,000 16,000 44,000 22,000 80,000 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 re- mainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. 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 May 1 include cash of $33,000, marketable securities of $40,000, and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). Sales on account for March and April were $60,000 and $72,000, respectively. Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the pe- riod they are incurred. An estimated income tax payment of $14,000 will be made in June. Sonoma's regular quarterly dividend of $5,000 is expected to be declared in June and paid in July. Management desires to maintain a minimum cash balance of $30,000. Instructions 1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016.
The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bud- get for the next three months. You are presented with the following budget information: Sales. Manufacturing costs.. Selling and administrative expenses. Capital expenditures. May $86,000 34,000 15,000 June July $90,000 $95,000 39,000 16,000 44,000 22,000 80,000 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 re- mainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, and the annual property taxes are paid in November. 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 May 1 include cash of $33,000, marketable securities of $40,000, and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). Sales on account for March and April were $60,000 and $72,000, respectively. Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the pe- riod they are incurred. An estimated income tax payment of $14,000 will be made in June. Sonoma's regular quarterly dividend of $5,000 is expected to be declared in June and paid in July. Management desires to maintain a minimum cash balance of $30,000. Instructions 1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Please read the direcitons on the first picture and answer the problems on the second picture. Thanks for your time.
Transcribed Image Text:B
ROBLEM 22-4A
Question 1 ONLY
Sonoma Housewares, Inc.
Cash Budget
For the Three Months Ending July 31, 2021
Estimated cash receipts from:
Cash sales
Collection of accounts receivable
Total cash receipts
Estimated cash payments for
Manufacturing costs
Selling and administrative expenses
Capital expenditures
Other purposes:
Income tax
Dividends
Total cash payments
Cash increase or (decrease)
Cash balance at beginning of month
Cash balance at end of month
Minimum cash balance
Excess or (deficiency)
May
E
June
July
G
H
Transcribed Image Text:Instructions
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5.
6.
Prepare a factory overhead cost budget for January.
Prepare a cost of goods sold budget for January. Work in process at the beginning of
January is estimated to be $33,600, and work in process at the end of January is
estimated to be $41,200.
7.
Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement for January.
PR 22-4A Cash budget
OBJ.S
The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash bud-
get for the next three months. You are presented with the following budget information:
Sales
Manufacturing costs...
Selling and administrative expenses.
Capital expenditures.
May
$86,000
34,000
15,000
June
$90,000
39,000
16,000
July
$95,000
44,000
22,000
80,000
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 re-
mainder the following month (second month following sale). Depreciation, insurance,
and
property tax expense represent $3,500 of the estimated monthly manufacturing costs.
The annual insurance premium is paid in September, and the annual property taxes are
paid in November. 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 May 1 include cash of $33,000, marketable securities of $40,000,
and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March
sales). Sales on account for March and April were $60,000 and $72,000, respectively.
Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for
manufacturing costs. All selling and administrative expenses are paid in cash in the pe-
riod they are incurred. An estimated income tax payment of $14,000 will be made in
June. Sonoma's regular quarterly dividend of $5,000 is expected to be declared in June
and paid in July. Management desires to maintain a minimum cash balance of $30,000.
Instructions
1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016.
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