The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: Cash balance on June 1 is $1,286. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. Rent is $4,100 per month. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn’t have access to short-term loans. Required: Question Content Area 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers. Cash Budget For June Beginning cash balance $fill in the blank 4e1b51fb1019fd0_1 Collections: Cash sales fill in the blank 4e1b51fb1019fd0_2 Credit sales: Current month $fill in the blank 4e1b51fb1019fd0_3 × fill in the blank 4e1b51fb1019fd0_4 % fill in the blank 4e1b51fb1019fd0_5 May credit sales $fill in the blank 4e1b51fb1019fd0_6 × fill in the blank 4e1b51fb1019fd0_7 % fill in the blank 4e1b51fb1019fd0_8 April credit sales fill in the blank 4e1b51fb1019fd0_9 Total cash available $fill in the blank 4e1b51fb1019fd0_10 Less disbursements: Inventory purchases: Current month $fill in the blank 4e1b51fb1019fd0_11 × fill in the blank 4e1b51fb1019fd0_12 % $fill in the blank 4e1b51fb1019fd0_13 Prior month $fill in the blank 4e1b51fb1019fd0_14 × fill in the blank 4e1b51fb1019fd0_15 % fill in the blank 4e1b51fb1019fd0_16 Salaries and wages fill in the blank 4e1b51fb1019fd0_17 Rent fill in the blank 4e1b51fb1019fd0_18 Taxes fill in the blank 4e1b51fb1019fd0_19 Total cash needs fill in the blank 4e1b51fb1019fd0_20 Excess of cash available over needs $fill in the blank 4e1b51fb1019fd0_21
The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: Cash balance on June 1 is $1,286. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible. Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. Rent is $4,100 per month. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn’t have access to short-term loans. Required: Question Content Area 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers. Cash Budget For June Beginning cash balance $fill in the blank 4e1b51fb1019fd0_1 Collections: Cash sales fill in the blank 4e1b51fb1019fd0_2 Credit sales: Current month $fill in the blank 4e1b51fb1019fd0_3 × fill in the blank 4e1b51fb1019fd0_4 % fill in the blank 4e1b51fb1019fd0_5 May credit sales $fill in the blank 4e1b51fb1019fd0_6 × fill in the blank 4e1b51fb1019fd0_7 % fill in the blank 4e1b51fb1019fd0_8 April credit sales fill in the blank 4e1b51fb1019fd0_9 Total cash available $fill in the blank 4e1b51fb1019fd0_10 Less disbursements: Inventory purchases: Current month $fill in the blank 4e1b51fb1019fd0_11 × fill in the blank 4e1b51fb1019fd0_12 % $fill in the blank 4e1b51fb1019fd0_13 Prior month $fill in the blank 4e1b51fb1019fd0_14 × fill in the blank 4e1b51fb1019fd0_15 % fill in the blank 4e1b51fb1019fd0_16 Salaries and wages fill in the blank 4e1b51fb1019fd0_17 Rent fill in the blank 4e1b51fb1019fd0_18 Taxes fill in the blank 4e1b51fb1019fd0_19 Total cash needs fill in the blank 4e1b51fb1019fd0_20 Excess of cash available over needs $fill in the blank 4e1b51fb1019fd0_21
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
100%
The owner of a building supply company has requested a
- Cash balance on June 1 is $1,286.
- Actual sales for April and May are as follows:
April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 - Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are uncollectible.
- Inventory purchases average 66% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid for in the following month.
- Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner.
- Rent is $4,100 per month.
- Taxes to be paid in June are $6,780.
The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minimum cash balance is required. The owner of the company doesn’t have access to short-term loans.
Required:
Question Content Area
1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers.
| Cash Budget For June |
||||
| Beginning cash balance | $fill in the blank 4e1b51fb1019fd0_1 | |||
| Collections: | ||||
| Cash sales | fill in the blank 4e1b51fb1019fd0_2 | |||
| Credit sales: | ||||
| Current month | ||||
| $fill in the blank 4e1b51fb1019fd0_3 × fill in the blank 4e1b51fb1019fd0_4 % | fill in the blank 4e1b51fb1019fd0_5 | |||
| May credit sales | ||||
| $fill in the blank 4e1b51fb1019fd0_6 × fill in the blank 4e1b51fb1019fd0_7 % | fill in the blank 4e1b51fb1019fd0_8 | |||
| April credit sales | fill in the blank 4e1b51fb1019fd0_9 | |||
| Total cash available | $fill in the blank 4e1b51fb1019fd0_10 | |||
| Less disbursements: | ||||
| Inventory purchases: | ||||
| Current month | ||||
| $fill in the blank 4e1b51fb1019fd0_11 × fill in the blank 4e1b51fb1019fd0_12 % | $fill in the blank 4e1b51fb1019fd0_13 | |||
| Prior month | ||||
| $fill in the blank 4e1b51fb1019fd0_14 × fill in the blank 4e1b51fb1019fd0_15 % | fill in the blank 4e1b51fb1019fd0_16 | |||
| Salaries and wages | fill in the blank 4e1b51fb1019fd0_17 | |||
| Rent | fill in the blank 4e1b51fb1019fd0_18 | |||
| Taxes | fill in the blank 4e1b51fb1019fd0_19 | |||
| Total cash needs | fill in the blank 4e1b51fb1019fd0_20 | |||
| Excess of cash available over needs | $fill in the blank 4e1b51fb1019fd0_21 |
Expert Solution
Step 1
A company's projection of cash inflows and outflows over a certain time period is known by preparing the cash budget. A corporation use the cash budget so as to assess whether they have enough cash on hand to maintain operations for the specified period of time or required to borrow from the external sources.
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