# Cash Receipts and Payments Budgeting GuidePaperclip Company's budget committee provides the following financial planning information:**Objective**: Prepare budgets for cash receipts, cash payments, and selling and administrative expenses for January and February 2018.## Requirement 1: Cash Receipts SchedulePrepare the schedule of cash receipts from customers assuming:- 70% of cash receipts are collected in the month of sale.- 30% are collected in the following month.### Budgeted Cash Receipts from Customers| | January | February ||---------------------------------|---------|----------|| Current month sales, 70% | | || Prior month sales, 30% | | || **Total cash receipts** | | |## Requirement 2: Cash Payments for Purchases SchedulePrepare the schedule of cash payments for purchases assuming:- 60% of purchases are paid in the month of purchase.- 40% are paid in the following month.### Budgeted Cash Payments for Purchases| | January | February ||---------------------------------|---------|----------|| 40% of last month's purchases | | || 60% of current month's purchases| | || **Total cash payments** | | |## Requirement 3: Selling and Administrative Expenses SchedulePrepare the schedule for selling and administrative expenses assuming:- 40% of Salaries and Commissions Payable is for commissions, and 60% is for salaries.- Salaries and commissions are paid 70% in the current month and 30% in the next month.- Rent and income tax expenses are paid as incurred.- Insurance expense is a usage of the prepaid amount.### Budgeted Cash Payments for Selling and Administrative Expenses| | January | February ||---------------------------------------|---------|----------|| Variable expenses: | | || 30% of last month’s Commission Expense| | |### Requirements Summary1. Precisely forecast cash inflows and outflows.2. Plan adequately for future expenses and manage cash efficiently.### Additional NotesAssume no financing activities take place during January and February 2018.For more details on budget preparation and management, please consult the additional resources section. **Paperclip Company's Budget Information**The Paperclip Company's budget committee provides the following information. Detailed analysis and calculations are required to prepare the cash budget for January and February 2018. No financing transactions are assumed to take place during this period.### Variable Expenses- **30% of last month's Commission Expense**- **70% of current month's Commission Expense**- **Total payments for variable expenses** for January and February need to be calculated based on the above percentages.### Fixed Expenses- **30% of last month's Salaries Expense**- **70% of current month's Salaries Expense**- **Rent Expense** for January and February is constant.- **Total payments for fixed expenses** need to be tallied including the rent expense.### Total Payments for Selling and Administrative (S&A) Expenses- The sum of both variable and fixed expenses calculated above for each month.### Requirement 4**Prepare the Cash Budget for January and February 2018**#### Cash Budget Layout1. **Beginning cash balance**2. **Cash receipts from customers**3. **Cash available**4. **Cash payments:** - Purchases of merchandise inventory - Selling and administrative expenses - Payments for income taxes - **Total cash payments** to be calculated.5. **Ending cash balance**### Data Table Information- **Account Balances as of December 31, 2017:** - Cash: $23,000 - Accounts Receivable: $18,000 - Merchandise Inventory: $17,000 - Accounts Payable: $12,500 - Salaries and Commissions Payable: $2,600- **Budgeted Amounts for 2018:** - Sales, all on account: $83,000 (January), $84,100 (February) - Purchases, all on account: $40,500 (January), $41,600 (February) - Commissions Expense: $4,150 (January), $4,205 (February) - Salaries Expense: $4,000 (January and February) - Rent Expense: $2,800 (January and February) - Depreciation Expense: $800 (January and February) - Insurance Expense: $200 (January and February) - Income Tax Expense: $1,700 (January), $1,700 (February)Use

Under cash budget only activities that impact the cash balance are considered.

- X Data Table December 31, 2017, account balances: Cash 23,000 Accounts Receivable 18,000 Merchandise Inventory 17,000 Accounts Payable 12.500 Salaries and Commissions Payable 2.600 Budgeted amounts for 2018: January February Sales, all on account 83,000 S 84,100 Purchases, all on account 40,500 41,600 Commissions Expense 4,150 4,205 Salaries Expense 4,000 4,000 Rent Expense 2,800 2,800 Depreciation Expense 800 800 Insurance Expense 200 200 Income Tax Expense 1,700 1,700 Print Done

- X Data Table December 31, 2017, account balances: Cash 23,000 Accounts Receivable 18,000 Merchandise Inventory 17,000 Accounts Payable 12.500 Salaries and Commissions Payable 2.600 Budgeted amounts for 2018: January February Sales, all on account 83,000 S 84,100 Purchases, all on account 40,500 41,600 Commissions Expense 4,150 4,205 Salaries Expense 4,000 4,000 Rent Expense 2,800 2,800 Depreciation Expense 800 800 Insurance Expense 200 200 Income Tax Expense 1,700 1,700 Print Done

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Schedule of Cash Payments Select Physical Therapy Inc. is planning its cash payments for operations for the third quarter (July-September), 2017. The Accrued Expenses Payable balance on July 1 is $31,700. The budgeted expenses for the next three months are as follows: July August September Salaries $72,900 $88,800 $98,300 Utilities 6,000 6,700 7,900 Other operating expenses 55,400 60,400 66,500 Total $134,300 $155,900 $172,700 Other operating expenses include $4,000 of monthly depreciation expense and $900 of monthly insurance expense that was prepaid for the year on March 1 of the current year. Of the remaining expenses, 75% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on July 1 relates to the expenses incurred in June. Prepare a schedule of cash payments for operations for July, August, and September. Select Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months…
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Question 1 The following data apply to the HASF Hardware Store and its 2011 budget Forecast Sales Jan $200,000 Feb $160,000 Mar $180,000 Apr $45,000 Balance Sheet Data December 31,2010 Cash $80,000 Account receivable: November sales 45000 December sales 50000 Inventory 54000 Account payable(merchandise) 27000 Other data are as follows: Sales are on credit with 60% of sales collected in the same month after sale ,40% in the second month after sale Cost of goods sold is 50% of sales Other variables costs are 30% of sales paid in the month incurred Inventories are to be 80% of next month’s budgeted sales requirements Fixed expenses are $15000 per month; all require cash Credit time period for purchases are 30 days On basis of above information answer following questions Find fixed expense in the month of March?
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