Cash Budget The owner of a building supply company has requested a cash budget f

Question

Cash Budget The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $936. b. Actual sales for April and May are as follows: April May Cash sales Credit sales Total sales the third month are subject to a 2% late fee, which is paid by those customers in addition to what they owe. The remaining sales are nailestible for in the following month. $10,000 28,900 $38,900 $18,000 35,000 $53,000 sales are collected over a 3 month period: 40% in the month of sale, 30% in the second month, and 20% in the third month. The sales collected in d. Inventory purchases average 68% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80% are paid e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner f. Rent is $4,200 per month. g. Taxes to be paid in June are $6,780. The owner also tells you that he expects cash sales of $18,600 and credit sales of $54,000 for June. No minímum cash balance is required. The owner of the company doesn't have access to short-term loans. Required: 1. Prepare a cash budget for June. Include supporting schedules for cash collections and cash payments. Round calculations and final answers to the nearest dollar. Be sure to enter percentages as whole numbers. Previous Next

Explanation / Answer

Cash budget for Building Supply Company for the month of June Particulars Amount $ Amount $ Cash balance as on 01st June        936.00 Add: Collections in the month of June Cash sales in the month of June 18,600.00 Cash collected from credit sales in June (54000*40%) 21,600.00 Cash collected from credit sales of April with late fee of 2% (28900*20%*102%)      5,895.60 Cash collected from credit sales of May without late fee of 2% (35000*30%) 10,500.00 56,595.60 Total cash available 57,531.60 Less:Disbursements Payment to Inventory purchases in the month of June (54000+18600)*68%*20%      9,873.60 Payment to Inventory purchases in the month of May (53000*68%*80%) 28,832.00 Salaries and Wages 11,750.00 Rent      4,200.00 Taxes      6,780.00 Total cash needs 61,435.60 Excess of cash needed for meeting the needs -3,904.00 , -ve indicates excess cash needed to meet the expenses

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