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 budget information: May June July Sales $132,000 $164,000 $210,000 Manufacturing costs 55,000 71,000 76,000 Selling and administrative expenses 38,000 44,000 46,000 Capital expenditures _ _ 111,000 The company expects to sell about 12% of its merchandise for cash. Of sales on account, 65% 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, 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 $50,000, marketable securities of $71,000, and accounts receivable of $153,100 ($116,000 from April sales and $37,100 from March sales). Sales on account for March and April were $106,000 and $116,000, respectively. Current liabilities as of May 1 include $13,500 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 $20,000 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 $39,000. Required: Question Content Area 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 BudgetFor the Three Months Ending July 31 May June July Estimated cash receipts from: Cash sales $fill in the blank ded402fc5027055_1 $fill in the blank ded402fc5027055_2 $fill in the blank ded402fc5027055_3 Collection of accounts receivable fill in the blank ded402fc5027055_4 fill in the blank ded402fc5027055_5 fill in the blank ded402fc5027055_6 Total cash receipts $fill in the blank ded402fc5027055_7 $fill in the blank ded402fc5027055_8 $fill in the blank ded402fc5027055_9 Estimated cash payments for: Manufacturing costs $fill in the blank ded402fc5027055_10 $fill in the blank ded402fc5027055_11 $fill in the blank ded402fc5027055_12 Selling and administrative expenses fill in the blank ded402fc5027055_13 fill in the blank ded402fc5027055_14 fill in the blank ded402fc5027055_15 Capital expenditures fill in the blank ded402fc5027055_16 Other purposes: Income tax fill in the blank ded402fc5027055_17 Dividends fill in the blank ded402fc5027055_18 Total cash payments $fill in the blank ded402fc5027055_19 $fill in the blank ded402fc5027055_20 $fill in the blank ded402fc5027055_21 Cash increase or (decrease) $fill in the blank ded402fc5027055_22 $fill in the blank ded402fc5027055_23 $fill in the blank ded402fc5027055_24 Cash balance at beginning of month fill in the blank ded402fc5027055_25 fill in the blank ded402fc5027055_26 fill in the blank ded402fc5027055_27 Cash balance at end of month $fill in the blank ded402fc5027055_28 $fill in the blank ded402fc5027055_29 $fill in the blank ded402fc5027055_30 Minimum cash balance fill in the blank ded402fc5027055_31 fill in the blank ded402fc5027055_32 fill in the blank ded402fc5027055_33 Excess (deficiency) $fill in the blank ded402fc5027055_34 $fill in the blank ded402fc5027055_35 $fill in the blank ded402fc5027055_36 Question Content Area 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 budget information: May June July Sales $132,000 $164,000 $210,000 Manufacturing costs 55,000 71,000 76,000 Selling and administrative expenses 38,000 44,000 46,000 Capital expenditures _ _ 111,000 The company expects to sell about 12% of its merchandise for cash. Of sales on account, 65% 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, 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 $50,000, marketable securities of $71,000, and accounts receivable of $153,100 ($116,000 from April sales and $37,100 from March sales). Sales on account for March and April were $106,000 and $116,000, respectively. Current liabilities as of May 1 include $13,500 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 $20,000 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 $39,000. Required: Question Content Area 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 BudgetFor the Three Months Ending July 31 May June July Estimated cash receipts from: Cash sales $fill in the blank ded402fc5027055_1 $fill in the blank ded402fc5027055_2 $fill in the blank ded402fc5027055_3 Collection of accounts receivable fill in the blank ded402fc5027055_4 fill in the blank ded402fc5027055_5 fill in the blank ded402fc5027055_6 Total cash receipts $fill in the blank ded402fc5027055_7 $fill in the blank ded402fc5027055_8 $fill in the blank ded402fc5027055_9 Estimated cash payments for: Manufacturing costs $fill in the blank ded402fc5027055_10 $fill in the blank ded402fc5027055_11 $fill in the blank ded402fc5027055_12 Selling and administrative expenses fill in the blank ded402fc5027055_13 fill in the blank ded402fc5027055_14 fill in the blank ded402fc5027055_15 Capital expenditures fill in the blank ded402fc5027055_16 Other purposes: Income tax fill in the blank ded402fc5027055_17 Dividends fill in the blank ded402fc5027055_18 Total cash payments $fill in the blank ded402fc5027055_19 $fill in the blank ded402fc5027055_20 $fill in the blank ded402fc5027055_21 Cash increase or (decrease) $fill in the blank ded402fc5027055_22 $fill in the blank ded402fc5027055_23 $fill in the blank ded402fc5027055_24 Cash balance at beginning of month fill in the blank ded402fc5027055_25 fill in the blank ded402fc5027055_26 fill in the blank ded402fc5027055_27 Cash balance at end of month $fill in the blank ded402fc5027055_28 $fill in the blank ded402fc5027055_29 $fill in the blank ded402fc5027055_30 Minimum cash balance fill in the blank ded402fc5027055_31 fill in the blank ded402fc5027055_32 fill in the blank ded402fc5027055_33 Excess (deficiency) $fill in the blank ded402fc5027055_34 $fill in the blank ded402fc5027055_35 $fill in the blank ded402fc5027055_36 Question Content Area 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 Content Area

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 BudgetFor the Three Months Ending July 31

	May	June	July
Estimated cash receipts from:
Cash sales	$fill in the blank ded402fc5027055_1	$fill in the blank ded402fc5027055_2	$fill in the blank ded402fc5027055_3
Collection of accounts receivable	fill in the blank ded402fc5027055_4	fill in the blank ded402fc5027055_5	fill in the blank ded402fc5027055_6
Total cash receipts	$fill in the blank ded402fc5027055_7	$fill in the blank ded402fc5027055_8	$fill in the blank ded402fc5027055_9
Estimated cash payments for:
Manufacturing costs	$fill in the blank ded402fc5027055_10	$fill in the blank ded402fc5027055_11	$fill in the blank ded402fc5027055_12
Selling and administrative expenses	fill in the blank ded402fc5027055_13	fill in the blank ded402fc5027055_14	fill in the blank ded402fc5027055_15
Capital expenditures			fill in the blank ded402fc5027055_16
Other purposes:
Income tax		fill in the blank ded402fc5027055_17
Dividends			fill in the blank ded402fc5027055_18
Total cash payments	$fill in the blank ded402fc5027055_19	$fill in the blank ded402fc5027055_20	$fill in the blank ded402fc5027055_21
Cash increase or (decrease)	$fill in the blank ded402fc5027055_22	$fill in the blank ded402fc5027055_23	$fill in the blank ded402fc5027055_24
Cash balance at beginning of month	fill in the blank ded402fc5027055_25	fill in the blank ded402fc5027055_26	fill in the blank ded402fc5027055_27
Cash balance at end of month	$fill in the blank ded402fc5027055_28	$fill in the blank ded402fc5027055_29	$fill in the blank ded402fc5027055_30
Minimum cash balance	fill in the blank ded402fc5027055_31	fill in the blank ded402fc5027055_32	fill in the blank ded402fc5027055_33
Excess (deficiency)	$fill in the blank ded402fc5027055_34	$fill in the blank ded402fc5027055_35	$fill in the blank ded402fc5027055_36

Question Content Area

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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	May	June	July
Sales	$132,000		$164,000	$210,000
Manufacturing costs	55,000		71,000	76,000
Selling and administrative expenses	38,000		44,000	46,000
Capital expenditures	_		_	111,000