Cash Budget The owner of a building supply company has requested a cash budget f
ID: 2598151 • Letter: C
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 $836 b. Actual sales for April and May are as follows: April May $18,000 35,000 $53,000 Cash sales $10,000 Credit sales 28,900 Total sales $38,900 C. Credit 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 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 uncollectible. d. Inventory purchases average 72% of a month's total sales. Of those purchases, 20% are paid for in the month of purchase. The remaining 80 are paid for in the following month. e. Salaries and wages total $11,750 per month, including a $4,500 salary paid to the owner f. Rent is $4,100 per month. 9. 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 minimum 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.Explanation / Answer
Requirement 1: Cash Budget for June: Beginning Cash Balance 836 Collections: Cash Sales 18600 Credit Sales: Current Month (54000*40%) 21600 May Credit Sales (35000*30%) 10500 April Credit Sales (28900*20%*102%) 5895.6 Total Cash Available 57431.6 Less Disbursements: Inventory Purchases: Current Month (72%(18600+54000)*20%) 10454.4 Prior Month (72%(18000+35000)*80%) 30528 Salaries and wages 11750 Rent 4100 Taxes 6780 Total Cash Needs 63612.4 Excess of Cash Available over needs -6180.8 Requirement 2: The Business show a negative balance for June