The following information is budgeted for McCracken Plumbing Supply Company for next quarter: April May June Sales ........................................................... $110,000 $130,000 $180,000 Merchandise purchases .............................. $85,000 $92,000 105,000 Selling and administrative expenses .......... $50,000 $50,000 $50,000 All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible. Merchandise purchases are paid in full the month following the month of purchase. The selling and administrative expenses above include $8,000 of depreciation on display fixtures and warehouse equipment. All other selling and administrative expenses are paid as incurred. McCracken wants to maintain a cash balance of $15,000. Any amount below this can be borrowed from a local bank as needed in increments of $1,000. All borrowings are made at month end. Required: Prepare McCracken's cash budget for the month of May. Use good form. McCracken expects to have $24,000 of cash on hand at the beginning of May.
Cash budget
The following information is budgeted for McCracken Plumbing Supply Company for next quarter:
April May June
Sales ........................................................... $110,000 $130,000 $180,000
Merchandise purchases .............................. $85,000 $92,000 105,000
Selling and administrative expenses .......... $50,000 $50,000 $50,000
All sales at McCracken are on credit. Forty percent are collected in the month of sale, 58% in the month following the sale, and the remaining 2% are uncollectible.
Merchandise purchases are paid in full the month following the month of purchase.
The selling and administrative expenses above include $8,000 of
Required:
Prepare McCracken's cash budget for the month of May. Use good form. McCracken expects to have $24,000 of cash on hand at the beginning of May.
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