CASHBGT Cash Budgeting Data Section Beginning cash balance $24,000 Sales $250,00

Question

CASHBGT Cash Budgeting Data Section Beginning cash balance $24,000 Sales $250,000 Gross profit percentage 45% Decrease in accounts receivable (increase) ($24,000) Increase in accounts payable (decrease) $51,000 Decrease in inventory (increase) ($98,000) Variable selling & admin. expenses 15% Fixed selling & admin. expenses $27,000 Answer Section Northern Gifts Cash Budget November Sales Cost of goods sold Decrease in accounts receivable (increase) Increase in accounts payable (decrease) Decrease in inventory (increase) Variable selling & admin. expenses Fixed selling & admin. expenses Net cash change for the month Beginning cash balance for month Projected ending cash balance $1,000

Explanation / Answer

1) Find the company's budgeted cash inflows for January and February.
January
195,000 Collected from previous month.
500,000 x 40% = 200,000 January cash Sales
500,000 x 60% x 30% = 90,000 Cash collected from January credit sales.
Total January cash inflows = 485,000
February
500,000 x 60% x 70% = 210,000 Collected from previous month
530,000 x 40% = 212,000 February Cash Sales
530,000 x 60% x 30% = 95,400 Cash collected from February credit sales
Total February cash inflows 517,400
2) Find the budgeted accounts receivable balance at the end of February.
530,000 x 60% x 70% = 222,600

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