Cash Budget Wilson\'s Retail Company is planning a cash budget for the next thre
ID: 2340040 • Letter: C
Question
Cash Budget
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:
All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 70 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $40,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $30,000.
Prepare monthly cash budgets for February, March, and April.
Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.
Month Sales Revenue Month Sales Revenue January $300,000 March $200,000 February 245,000 April 155,000Explanation / Answer
Wilson's Retail Company Cash Budgets February, March, and April February March April Cash balance, beginning 30000 47000 53500 Total Cash receipts 267000 218000 173000 Cash available 297000 265000 226500 Total disbursements 250000 211500 180000 Cash balance, ending 47000 53500 46500 Total Cash Receipts: January February March April Sales Revenue 300000 245000 200000 155000 In the Month of Sales(60%) 180000 147000 120000 93000 In the Next Month (40%) 120000 98000 80000 Total Cash Receipts 267000 218000 173000 Total Cash Disbusement: January February March April Sales Revenue 300000 245000 200000 155000 Cost of Goods Sold(70%) 210000 171500 140000 108500 Payment for Merchandise 210000 171500 140000 Operating Expense 40000 40000 40000 Total Cash Disbursement 250000 211500 180000