Twitty Company has the following information: Month

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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(M1)

Problem:

Twitty Company has the following information: Month

April May June July

$154,000 160,000 142,000 136,000

Budgeted Expenses per Month:

Wages Advertising Depreciation Rent Freight-out Other

$28,600 27,200 19,000 20,400 freight-out is20% of sales and other expenses are 8% of sales

Note: All cash expenses are paid when incurred.

The company requires a minimum cash balance of $5,000 to start a month. The beginning cash balance in June is budgeted to be $6,000.

Required:

1- Prepare a combined schedule of total operating expenses and cash disbursements for expenses for June.

2- The following additional information has been provided for June:

Cash Collections in June ......................................... $130,000 Inventory purchases (all paid in June)................................ $28,000 Dividends paid in June ....................................................... $4,000

Prepare a cash budget in good form for the month of June, using this information and the budgeted operating expenses you computed for part (1) above. The company borrows in multiples of $1,000 and the company will not pay interest until July.

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