Queensland Enterprises needs a cash budget for the month of June. The following
ID: 2479966 • Letter: Q
Question
Queensland Enterprises needs a cash budget for the month of June. The following information is available: The cash balance on June 1 is $13,000. Sales for May and June are $40,000 and $50,000, respectively. Cash collections on sales are 45 percent in the month of sale and 50 percent in the month after the sale; 5 percent of sales are uncollectible. General expenses budgeted for June are $20,000 (depreciation represents $1,000 of this amount). Inventory purchases will total $40,000 in May and $30,000 in June. The company pays for half of its inventory purchases in the month of purchase and for the other half the month after purchase. The company will pay $5,000 in cash for office furniture in June. Sales commissions for June are budgeted at $3,000. The company maintains a minimum ending cash balance of $5,000 and can borrow from the bank in multiples of $100. All loans are repaid after 60 days.
Explanation / Answer
Cash Budget
Schedule of Expected Cash Payments Month Detail May June July Aug Beginning AP - - - - - May (40000*0.5)(40000*0.5) 20,000.00 20,000.00 - - 40,000.00 June (30000*0.5)(30000*0.5) - 15,000.00 15,000.00 - 30,000.00 July (0*0.5)(0*0.5) - - - - Aug (0*0.5) - - Total Expected Payments 20,000.00 35,000.00 15,000.00 - 70,000.00