Budgeted cash sales 15,000 18,000 16,000 Budgeted credit sales 20,000 21,000 22,
ID: 2388560 • Letter: B
Question
Budgeted cash sales
15,000
18,000
16,000
Budgeted credit sales
20,000
21,000
22,000
Budgeted inventory purchases
22,000
24,000
28,000
Budgeted selling and admin expenses
3,000
2,000
2,500
Credit sales are expected to be collected 60% in month of sale; 40% in month following
Inventory purchases are expected to be paid 50% in month of purchase; 50% in month following
All selling and admin expenses are expected to be paid in full in month incurred. Depreciation expense is
included in budget at $500 per month
Company budgets the purchase of equipment in February for $45,000
Company maintains a minimum cash balance of $10,000
Interest rate for any borrowings is 6%. Borrowings (and repayments) are always made on the last day of the month
Prepare a cash budget for January, February and March.
Budgeted cash sales
15,000
18,000
16,000
Budgeted credit sales
20,000
21,000
22,000
Budgeted inventory purchases
22,000
24,000
28,000
Budgeted selling and admin expenses
3,000
2,000
2,500
Credit sales are expected to be collected 60% in month of sale; 40% in month following
Inventory purchases are expected to be paid 50% in month of purchase; 50% in month following
All selling and admin expenses are expected to be paid in full in month incurred. Depreciation expense is
included in budget at $500 per month
Company budgets the purchase of equipment in February for $45,000
Company maintains a minimum cash balance of $10,000
Interest rate for any borrowings is 6%. Borrowings (and repayments) are always made on the last day of the month
Prepare a cash budget for January, February and March.
Explanation / Answer
Sorry, don't know how to make a table here. All the months listed are from jan, feb and march.
Cash on hand at beginning of month 11,500 25,000 10,000
Cash sales 15,000 18,000 16,000
January credit sales 12,000 8,000
February credit sales 12,600 8,400
March credit sales 13,200
Total cash available 38,500 63,600 47,600
January inventory 11,000 11,000
February inventory 12,000 12,000
March inventory 14,000
Selling and administrative expenses 2,500 1,500 2,000
Equipment purchase 45,000
Total cash out 13,500 69,500 28,000
Excess (deficiency) of cash 25,000 (5,900) 19,600
Borrowing 15,900
Interest at 6% (one month) (79.50)
Principal repayment (9,520.50)
Cash on hand at end of month 25,000 10,000 10,000
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