Cash Budget Wilson\'s Retail Company is planning a cash budget for the next thre
ID: 2524653 • 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 $44,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $40,000.
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 205,000 April 190,000Explanation / Answer
Wilson's Retail Company
Cash Budgets
February, March, and April
February
March
April
Cash balance, beginning
40,000.00
29,000.00
43,500.00
Total Cash receipts
243,000.00
202,000.00
194,000.00
Cash available
283,000.00
231,000.00
237,500.00
Total disbursements
254,000.00
187,500.00
184,000.00
Cash balance, ending
29,000.00
43,500.00
53,500.00
Total Cash receipts
February = ($3,00,000*0.40)+($2,05,000*0.60) = $2,43,000
March = ($2,05,000*0.40) + ($2,00,000*0.60) = $2,02,000
April = ($2,00,000*0.40) + ($1,90,000*0.60) = $1,94,000
Total disbursements
February = $300000*0.70 + 44000 = $2,54,000
March = $205000*0.70 + 44000 = $1,87,500
April = $200000*0.70 + 44000 = $1,84,000
Wilson's Retail Company
Cash Budgets
February, March, and April
February
March
April
Cash balance, beginning
40,000.00
29,000.00
43,500.00
Total Cash receipts
243,000.00
202,000.00
194,000.00
Cash available
283,000.00
231,000.00
237,500.00
Total disbursements
254,000.00
187,500.00
184,000.00
Cash balance, ending
29,000.00
43,500.00
53,500.00