Cash Budget Wilson\'s Retail Company is planning a cash budget for the next thre
ID: 2478862 • 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 $41,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $20,000.
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 210,000 April 190,000Explanation / Answer
Cash Budgets February, March, April February March April Cash Beginning 20000 15000 31000 Total Cash Receipts 246000 204000 194000 Cash Available 266000 219000 225000 Total Disbursements 251000 188000 181000 Cash Balance, Ending 15000 31000 44000 Working Notes January February March April Sales 300000 210000 200000 190000 Same Month 180000 126000 120000 114000 Next Month 120000 84000 80000 Total 246000 204000 194000 COGS 210000 147000 140000 133000 Payments 210000 147000 140000 Operating Expenses 41000 41000 41000 Total payments 251000 188000 181000