The company expects about 30% of sales to be cash transactions. Of sales on acco
ID: 2414920 • Letter: T
Question
The company expects about 30% of sales to be cash transactions. Of sales on account, 60% are expected to be collected in the first month after the sale is made, and 40% are expected to be collected in the second month after sale. Depreciation, insurance, and property taxes represent $19,200 of the estimated monthly cost of goods sold and $12,800 of the estimated monthly operating expenses. The annual insurance premium is paid in January, and the annual property taxes are paid in August. Of the remainder of the cost of goods sold and operating expenses, 80% are expected to be paid in the month in which they are incurred, and the balance is expected to be paid in the following month.
Current assets as of April 1, 2013, consist of cash of $22,400 and accounts receivable of $239,680 ($167,776 from March credit sales and $71,904 from February credit sales). Current liabilities as ofApril 1 consist of $28,800 of accounts payable for product costs incurred in March; $7,360 of accrued liabilities for operating expenses incurred in March; and a $64,000, 10%, 120-day note payable that is due on April 17, 2013.
An estimated income tax payment of $64,000 will be made in May. The regular quarterly dividend of $25,600 is expected to be declared in May and paid in June. Capital expenditures amounting to $27,520 will be made in April.
Complete the monthly cash budgets for the second quarter of 2013 using the following format. Note that the ending cash balance for June is provided as a check figure. (Round your answers to whole number. Use 360 days year for calculations.)
Assume that management of Sea Tech, Inc., desires to maintain a minimum cash balance of $18,500 at the beginning of each month and has arranged a $100,000 line of credit with a local bank at an interest rate of 10% to ensure the availability of funds. Borrowing transactions are to occur only at the end of months in which the budgeted cash balance would otherwise fall short of the $18,500 minimum balance. Repayments of principal and interest are to occur at the end of the earliest month in which sufficient funds are expected to be available for repayment. (Round your intermediate calculations and answers to whole number. Use 360 days year for calculations.)
Received incomplete answer last time I attempted to get help on this. Please help.
Following are the budgeted income statements for the second quarter of 2013 for Sea Tech, Inc.: SEATECH, INC. Cash Budget For the months of April, May, and June, 2013 April May June Beginning cash balance Cash Receipts From cash sales made in current month From credit sales made in 22,400 67,200 81,600 91,200 0 S February March April May 28,762 $ 100,666 67,110 S 94,080 65,720 114,240 271,160 0 S 219,028 S 242,790 S Total cash available Cash Disbursements For cost of goods sold/operating expenses incurred in: March April May June For payment of note payable and interest For capital expenditures For payment of income taxes For payment of dividends Total disbursements Ending cash balance 0 S 0 S 219,028 S 242,790 S 36,267Explanation / Answer
a. Monthly Cash Budget:
April May June $ $ $ Beginning cash balance 22,400 18,500 18,500 Cash receipts From cash sales made during the current month 67,200 81,600 91,200 From credit sales made in February 71,904 March 100,666 67,110 April 94,080 62,720 May 114,240 Total cash available 262,170 261,290 286,660 Cash Disbursements For cost of goods sold and operating expenses For March 36,160 April 125,440 31,360 May 152,320 38,080 June 170,240 Note payable and interest 66,133 97 138 Capital expenditure 27,520 Income tax 64,000 Dividend 25,600 Cash surplus / ( Deficiency) 6,917 13,513 52,602 Borrowing/ (Repayment) 11,583 4,987 (16,570) Ending cash balance 18,500 18,500 36,032