Preparation of cash budget Use the following information to prepare a cash budge
ID: 2458958 • Letter: P
Question
Preparation of cash budget
Use the following information to prepare a cash budget for Lifehouse Corporation for the month of June 2015.
In May, 30-day credit sales were $175,000; 80% of this amount is estimated to be collectible in June.
June sales are estimated to be $425,000; cash sales are usually 25% of total sales. Only 10% of credit sales are collected in the month in which the sale is made.
Total fixed expenses are $60,000 per month, including $26,000 depreciation. Variable expenses are 55% of sales. All expenses requiring payment are paid in cash when incurred.
A $40,000 note payable must be paid on June 30.
As of May 31, the cash balance is $94,000.
Explanation / Answer
Answer : Cash Budget for June, 2015
Particulars Amount Opening balance of cash 94000 Add : Sale value of may collectable in June,15 175000*80% 140000 Cash sales in June 425000*25% 106250 Cash collected of credit sales (425000-106250)*10% 31875 Tptal estimated cash in hand 372125 Less cash expenses Varable expenses 425000*55% 233750 Fixed expenses 60000-26000 34000 Cash in hand after expenses 104375 Less : Note payable in June,2015 40000 Cash in hand on June, 30 64375