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
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.
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![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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41476158-3455-46b8-90cd-c93ebf8f3cd1%2Fec3a238e-aaa9-47c8-9efe-974cbd6528c9%2F072sqzr_processed.jpeg&w=3840&q=75)
![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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F41476158-3455-46b8-90cd-c93ebf8f3cd1%2Fec3a238e-aaa9-47c8-9efe-974cbd6528c9%2Foeo9ui9_processed.jpeg&w=3840&q=75)
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