ABC Company\'s budgeted sales for June, July, and August are 12,000, 16,000, and
ID: 2451562 • Letter: A
Question
ABC Company's budgeted sales for June, July, and August are 12,000, 16,000, and 14,000 units. The soiling price for each unit is $18. Based on past experience, ABC expects that 30% of a month's sales will be collected in the month of sale, 60% in the following month, and 8% in the second month following the sale. ABC Company has a cash balance of $25,000 on August 1 and requires a minimum ending cash balance of $20,000. Cash disbursements budgeted for August include inventory purchases. $40,000; other manufacturing expenses, $98,000; operating expenses, $76,200; bond retirements, $50,000; and dividend payments. $15,000.Explanation / Answer
Working
August Beginning Cash balance 25000 Cash Reciepts : Collection From Customer 265680 Total Cash Available 290680 Cash Disbursement : Inventory Purchases 40000 Other Manufacturing Expenses 98000 Operating Expenses 76200 Bond Retirement 50000 Dividend Payment 15000 Total Cash Disbursement 279200 Excess (deficiency) of receipts over Disbursement 11480 Financing 8520 Ending Cash Balance 20000