Cash Budget : It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate. To prepare: Monthly cash budget for the month of April, May, June.

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Answer 1

Question

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

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Answer 2

Question

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

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Answer 3

Question

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

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Answer 4

Question

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

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Answer 5

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

Answer 6

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)

Working note:

Formula to calculate interest expense for the month,

Interest expense=Beginning balance of loan×1%

For April

Given,
Beginning balance of loan is $2,000.

Substitute $2,000 for beginning balance.

Interest expense=$2,000×1% =$20

For May,

Beginning balance of loan $6,060 (calculated).

Substitute $6,060 for beginning balance.

Interest expense=$6,060×1% =$61

For June,

Beginning balance of loan $0 (calculated).

Substitute $0 for beginning balance.

Interest expense=$0×1% =$0

Answer 7

Chapter 20, Problem 30E

To determine

Cash Budget:

It is the prediction of cash inflows and outflows for an entity over a period of time. It is helpful in assessing that the entity has enough cash to operate.

To prepare: Monthly cash budget for the month of April, May, June.

Answer 8

Expert Solution & Answer

Explanation of Solution

Company C
Cash Budget
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Beginning cash balance	12,000	12,000	12,279
Add: Cash receipts (Working Note 1)	28,000	36,000	32,000
Total cash available	40,000	48,000	44,279
Less: Cash disbursement (Working Note 2)	32,040	29,600	28,080
Interest expense (working note 3)	20	61	-
Preliminary cash balance	7,940	18,339	16,199
Less: Required ending cash balance	12,000	12,000	12,000
Surplus	(4,060)	6,339	4,199
Beginning balance of loan	2,000	6,060	0
Add: Additional loan from bank	4,060	0	0
Less: Repayment of loan	0	6,060	0
Ending loan balance	6,060	0	0
Ending cash balance carried forward next month	12,000	12,279	16,199
Table (1)

Working note:

Company C
Cash Receipts
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Sales	32,000	40,000	24,000
Cash collection:
Previous sale (50%)	12,000	16,000	20,000
Current sale (50%)	16,000	20,000	12,000
Total	28,000	36,000	32,000
Table (2)

Working note:

Company C
Cash Disbursements
Particulars	April Amount ($)	May Amount ($)	June Amount ($)
Cash payments for merchandise	20,200	16,800	17,200
Sales commission ( sales×10% )	3,200	4,000	2,400
Shipping ( sales×2% )	640	800	480
Salaries	5,000	5,000	5,000
Rent	3,000	3,000	3,000
Total	32,040	29,600	28,080
Table (3)