
Financial and Managerial Accounting: Information for Decisions
6th Edition
ISBN: 9780078025761
Author: John J Wild, Ken Shaw Accounting Professor, Barbara Chiappetta Fundamental Accounting Principles
Publisher: McGraw-Hill Education
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Question
Chapter 20, Problem 30E
To determine
It is the prediction of
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 | 3,200 | 4,000 | 2,400 | |
Shipping | 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,
For April
Given,
Beginning balance of loan is $2,000.
Substitute $2,000 for beginning balance.
For May,
Beginning balance of loan $6,060 (calculated).
Substitute $6,060 for beginning balance.
For June,
Beginning balance of loan $0 (calculated).
Substitute $0 for beginning balance.
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Chapter 20 Solutions
Financial and Managerial Accounting: Information for Decisions
Ch. 20 - Prob. 1MCQCh. 20 - Prob. 2MCQCh. 20 - Prob. 3MCQCh. 20 - Prob. 4MCQCh. 20 - Prob. 5MCQCh. 20 - Identify at least three benefits of budgeting in...Ch. 20 - What two common benchmarks can be used to evaluate...Ch. 20 - What is the benefit of continuous budgeting?Ch. 20 - Identify three usual time horizons for short-term...Ch. 20 - Why should each department participate in...
Ch. 20 - How does budgeting help management coordinate and...Ch. 20 - Why is the sales budget so important to the...Ch. 20 - What is the selling expense budget? What is the...Ch. 20 - Budgeting promotes good decision making by...Ch. 20 - GOOGLE Google prepares a cash budget. What is a...Ch. 20 - Prob. 11DQCh. 20 - Prob. 12DQCh. 20 - Prob. 13DQCh. 20 - Prob. 14DQCh. 20 - Prob. 1QSCh. 20 - Prob. 2QSCh. 20 - Prob. 3QSCh. 20 - Prob. 4QSCh. 20 - Prob. 5QSCh. 20 - Prob. 6QSCh. 20 - Prob. 7QSCh. 20 - Prob. 8QSCh. 20 - Prob. 9QSCh. 20 - Prob. 10QSCh. 20 - Prob. 11QSCh. 20 - Prob. 12QSCh. 20 - Prob. 13QSCh. 20 - Prob. 14QSCh. 20 - Prob. 15QSCh. 20 - Manufacturing: Production budget P1 Atlantic Surf...Ch. 20 - Prob. 17QSCh. 20 - Prob. 18QSCh. 20 - Prob. 19QSCh. 20 - Cash receipts, with uncollectible accounts P2 The...Ch. 20 - Cash receipts, with uncollectible accounts P2 Well...Ch. 20 - Prob. 22QSCh. 20 - Prob. 23QSCh. 20 - Prob. 24QSCh. 20 - Prob. 25QSCh. 20 - Prob. 26QSCh. 20 - Prob. 27QSCh. 20 - Prob. 28QSCh. 20 - Prob. 29QSCh. 20 - Prob. 30QSCh. 20 - Prob. 31QSCh. 20 - Prob. 32QSCh. 20 - Prob. 1ECh. 20 - Prob. 2ECh. 20 - Prob. 3ECh. 20 - Prob. 4ECh. 20 - Exercise 20-5 Manufacturing: Direct labor budget...Ch. 20 - Prob. 6ECh. 20 - Prob. 7ECh. 20 - Prob. 8ECh. 20 - Prob. 9ECh. 20 - Prob. 10ECh. 20 - Prob. 11ECh. 20 - Prob. 12ECh. 20 - Prob. 13ECh. 20 - Prob. 14ECh. 20 - Prob. 15ECh. 20 - Prob. 16ECh. 20 - Prob. 17ECh. 20 - Prob. 18ECh. 20 - Prob. 19ECh. 20 - Prob. 20ECh. 20 - Prob. 21ECh. 20 - Prob. 22ECh. 20 - Prob. 23ECh. 20 - Prob. 24ECh. 20 - Prob. 25ECh. 20 - Prob. 26ECh. 20 - Prob. 27ECh. 20 - Prob. 28ECh. 20 - Prob. 29ECh. 20 - Prob. 30ECh. 20 - Prob. 31ECh. 20 - Prob. 32ECh. 20 - Prob. 33ECh. 20 - Prob. 34ECh. 20 - Prob. 1PSACh. 20 - Prob. 2PSACh. 20 - Prob. 3PSACh. 20 - Prob. 4PSACh. 20 - Prob. 5PSACh. 20 - Prob. 6PSACh. 20 - Prob. 7PSACh. 20 - Prob. 8PSACh. 20 - Prob. 1PSBCh. 20 - Prob. 2PSBCh. 20 - Prob. 3PSBCh. 20 - Prob. 4PSBCh. 20 - Prob. 5PSBCh. 20 - Prob. 6PSBCh. 20 - Prob. 7PSBCh. 20 - Prob. 8PSBCh. 20 - Prob. 20SPCh. 20 - Prob. 1BTNCh. 20 - Prob. 2BTNCh. 20 - ETHICS CHALLENGE C1 BTN 20-3 Both the budget...Ch. 20 - Prob. 4BTNCh. 20 - Prob. 5BTNCh. 20 - Prob. 6BTNCh. 20 - Prob. 7BTNCh. 20 - Prob. 8BTNCh. 20 - Prob. 9BTN
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