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: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales May $10,000 $18,000 28,900 35,000 Total sales $38,900 $53,000 c. 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. d. 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. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. 9g. 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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

Please do not give solution in image format thanku 

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:
a. Cash balance on June 1 is $1,386.
b. Actual sales for April and May are as follows:
April
Cash sales
Credit sales
$10,000
28,900
Total sales
$38,900
$53,000
c. 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.
d. 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.
e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner.
f. Rent is $4,500 per month.
g.
Taxes to be paid in June are $6,780.
May
$18,000
35,000
Cash Budget
For June
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:
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.
Transcribed Image Text: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: a. Cash balance on June 1 is $1,386. b. Actual sales for April and May are as follows: April Cash sales Credit sales $10,000 28,900 Total sales $38,900 $53,000 c. 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. d. 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. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner. f. Rent is $4,500 per month. g. Taxes to be paid in June are $6,780. May $18,000 35,000 Cash Budget For June 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: 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.
Beginning cash balance
Collections:
Cash sales
Credit sales:
Current month
May credit sales
April credit sales
Total cash available
Less disbursements:
Inventory purchases:
X
Current month
Total cash available
April credit sales
Prior month
Less disbursements:
Inventory purchases:
Rent
X
Current month
Prior month
Yes
No
X
Taxes
Salaries and wages
Total cash needs
%
%
Excess of cash available over needs
%
%
%
Cash Budget
For June
00 000
0000
2. Conceptual Connection: Did the business show a negative cash balance for June?
Transcribed Image Text:Beginning cash balance Collections: Cash sales Credit sales: Current month May credit sales April credit sales Total cash available Less disbursements: Inventory purchases: X Current month Total cash available April credit sales Prior month Less disbursements: Inventory purchases: Rent X Current month Prior month Yes No X Taxes Salaries and wages Total cash needs % % Excess of cash available over needs % % % Cash Budget For June 00 000 0000 2. Conceptual Connection: Did the business show a negative cash balance for June?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Budgeting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education