The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation: May June July Sales $115,000 $139,000 $184,000 Manufacturing costs 48,000 60,000 66,000 Selling and administrative expenses 33,000 38,000 40,000 Capital expenditures _ _ 44,000 The company expects to sell about 12% 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 $8,000 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, 85% 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 $44,000, marketable securities of $62,000, and accounts receivable of $128,600 ($101,000 from April sales and $27,600 from March sales). Sales on account for March and April were $92,000 and $101,000, respectively. Current liabilities as of May 1 include $14,500 of accounts payable incurred in April 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 June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $34,000. Required: 1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Sonoma Housewares Inc. Cash Budget For the Three Months Ending July 31 May June July Estimated cash receipts from: Cash sales $fill in the blank ca3a28ffdfa5036_1 $fill in the blank ca3a28ffdfa5036_2 $fill in the blank ca3a28ffdfa5036_3 Collection of accounts receivable fill in the blank ca3a28ffdfa5036_4 fill in the blank ca3a28ffdfa5036_5 fill in the blank ca3a28ffdfa5036_6 Total cash receipts $fill in the blank ca3a28ffdfa5036_7 $fill in the blank ca3a28ffdfa5036_8 $fill in the blank ca3a28ffdfa5036_9 Estimated cash payments for: Manufacturing costs $fill in the blank ca3a28ffdfa5036_10 $fill in the blank ca3a28ffdfa5036_11 $fill in the blank ca3a28ffdfa5036_12 Selling and administrative expenses fill in the blank ca3a28ffdfa5036_13 fill in the blank ca3a28ffdfa5036_14 fill in the blank ca3a28ffdfa5036_15 Capital expenditures fill in the blank ca3a28ffdfa5036_16 Other purposes: Income tax fill in the blank ca3a28ffdfa5036_17 Dividends fill in the blank ca3a28ffdfa5036_18 Total cash payments $fill in the blank ca3a28ffdfa5036_19 $fill in the blank ca3a28ffdfa5036_20 $fill in the blank ca3a28ffdfa5036_21 Cash increase or (decrease) $fill in the blank ca3a28ffdfa5036_22 $fill in the blank ca3a28ffdfa5036_23 $fill in the blank ca3a28ffdfa5036_24 Cash balance at beginning of month fill in the blank ca3a28ffdfa5036_25 fill in the blank ca3a28ffdfa5036_26 fill in the blank ca3a28ffdfa5036_27 Cash balance at end of month $fill in the blank ca3a28ffdfa5036_28 $fill in the blank ca3a28ffdfa5036_29 $fill in the blank ca3a28ffdfa5036_30 Minimum cash balance fill in the blank ca3a28ffdfa5036_31 fill in the blank ca3a28ffdfa5036_32 fill in the blank ca3a28ffdfa5036_33 Excess (deficiency) $fill in the blank ca3a28ffdfa5036_34 $fill in the blank ca3a28ffdfa5036_35 $fill in the blank ca3a28ffdfa5036_36 2. The budget indicates that the minimum cash balance be maintained in July. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will the minimum desired balance.

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation: May June July Sales $115,000 $139,000 $184,000 Manufacturing costs 48,000 60,000 66,000 Selling and administrative expenses 33,000 38,000 40,000 Capital expenditures _ _ 44,000 The company expects to sell about 12% 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 $8,000 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, 85% 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 $44,000, marketable securities of $62,000, and accounts receivable of $128,600 ($101,000 from April sales and $27,600 from March sales). Sales on account for March and April were $92,000 and $101,000, respectively. Current liabilities as of May 1 include $14,500 of accounts payable incurred in April 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 June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $34,000. Required: 1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign. Sonoma Housewares Inc. Cash Budget For the Three Months Ending July 31 May June July Estimated cash receipts from: Cash sales $fill in the blank ca3a28ffdfa5036_1 $fill in the blank ca3a28ffdfa5036_2 $fill in the blank ca3a28ffdfa5036_3 Collection of accounts receivable fill in the blank ca3a28ffdfa5036_4 fill in the blank ca3a28ffdfa5036_5 fill in the blank ca3a28ffdfa5036_6 Total cash receipts $fill in the blank ca3a28ffdfa5036_7 $fill in the blank ca3a28ffdfa5036_8 $fill in the blank ca3a28ffdfa5036_9 Estimated cash payments for: Manufacturing costs $fill in the blank ca3a28ffdfa5036_10 $fill in the blank ca3a28ffdfa5036_11 $fill in the blank ca3a28ffdfa5036_12 Selling and administrative expenses fill in the blank ca3a28ffdfa5036_13 fill in the blank ca3a28ffdfa5036_14 fill in the blank ca3a28ffdfa5036_15 Capital expenditures fill in the blank ca3a28ffdfa5036_16 Other purposes: Income tax fill in the blank ca3a28ffdfa5036_17 Dividends fill in the blank ca3a28ffdfa5036_18 Total cash payments $fill in the blank ca3a28ffdfa5036_19 $fill in the blank ca3a28ffdfa5036_20 $fill in the blank ca3a28ffdfa5036_21 Cash increase or (decrease) $fill in the blank ca3a28ffdfa5036_22 $fill in the blank ca3a28ffdfa5036_23 $fill in the blank ca3a28ffdfa5036_24 Cash balance at beginning of month fill in the blank ca3a28ffdfa5036_25 fill in the blank ca3a28ffdfa5036_26 fill in the blank ca3a28ffdfa5036_27 Cash balance at end of month $fill in the blank ca3a28ffdfa5036_28 $fill in the blank ca3a28ffdfa5036_29 $fill in the blank ca3a28ffdfa5036_30 Minimum cash balance fill in the blank ca3a28ffdfa5036_31 fill in the blank ca3a28ffdfa5036_32 fill in the blank ca3a28ffdfa5036_33 Excess (deficiency) $fill in the blank ca3a28ffdfa5036_34 $fill in the blank ca3a28ffdfa5036_35 $fill in the blank ca3a28ffdfa5036_36 2. The budget indicates that the minimum cash balance be maintained in July. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will the minimum desired balance.

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 Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budgetinformation:

	May	June	July
Sales	$115,000		$139,000	$184,000
Manufacturing costs	48,000		60,000	66,000
Selling and administrative expenses	33,000		38,000	40,000
Capital expenditures	_		_	44,000

The company expects to sell about 12% 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 $8,000 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, 85% 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 $44,000, marketable securities of $62,000, and accounts receivable of $128,600 ($101,000 from April sales and $27,600 from March sales). Sales on account for March and April were $92,000 and $101,000, respectively. Current liabilities as of May 1 include $14,500 of accounts payable incurred in April 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 June. Sonoma’s regular quarterly dividend of $8,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $34,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for May, June, and July. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Sonoma Housewares Inc.
Cash Budget
For the Three Months Ending July 31
	May	June	July
Estimated cash receipts from:
Cash sales	$fill in the blank ca3a28ffdfa5036_1	$fill in the blank ca3a28ffdfa5036_2	$fill in the blank ca3a28ffdfa5036_3
Collection of accounts receivable	fill in the blank ca3a28ffdfa5036_4	fill in the blank ca3a28ffdfa5036_5	fill in the blank ca3a28ffdfa5036_6
Total cash receipts	$fill in the blank ca3a28ffdfa5036_7	$fill in the blank ca3a28ffdfa5036_8	$fill in the blank ca3a28ffdfa5036_9
Estimated cash payments for:
Manufacturing costs	$fill in the blank ca3a28ffdfa5036_10	$fill in the blank ca3a28ffdfa5036_11	$fill in the blank ca3a28ffdfa5036_12
Selling and administrative expenses	fill in the blank ca3a28ffdfa5036_13	fill in the blank ca3a28ffdfa5036_14	fill in the blank ca3a28ffdfa5036_15
Capital expenditures			fill in the blank ca3a28ffdfa5036_16
Other purposes:
Income tax		fill in the blank ca3a28ffdfa5036_17
Dividends			fill in the blank ca3a28ffdfa5036_18
Total cash payments	$fill in the blank ca3a28ffdfa5036_19	$fill in the blank ca3a28ffdfa5036_20	$fill in the blank ca3a28ffdfa5036_21
Cash increase or (decrease)	$fill in the blank ca3a28ffdfa5036_22	$fill in the blank ca3a28ffdfa5036_23	$fill in the blank ca3a28ffdfa5036_24
Cash balance at beginning of month	fill in the blank ca3a28ffdfa5036_25	fill in the blank ca3a28ffdfa5036_26	fill in the blank ca3a28ffdfa5036_27
Cash balance at end of month	$fill in the blank ca3a28ffdfa5036_28	$fill in the blank ca3a28ffdfa5036_29	$fill in the blank ca3a28ffdfa5036_30
Minimum cash balance	fill in the blank ca3a28ffdfa5036_31	fill in the blank ca3a28ffdfa5036_32	fill in the blank ca3a28ffdfa5036_33
Excess (deficiency)	$fill in the blank ca3a28ffdfa5036_34	$fill in the blank ca3a28ffdfa5036_35	$fill in the blank ca3a28ffdfa5036_36

2. The budget indicates that the minimum cash balance be maintained in July. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will the minimum desired balance.

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