v Question Completion Status: Words:0 QUESTION 14 Spaulding Enterprises has budg
ID: 2413329 • Letter: V
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v Question Completion Status: Words:0 QUESTION 14 Spaulding Enterprises has budgeted sales revenues as follows: Credit sales Cash sales Total sales $135,000 90.000 $225,000 $ 90,000 195,000 $125,000 $380.000 Past experience indo ates that 65% of the credit sales will be collected in the month of sale and the remaining 35% will be colected in te following month. inventory are all on credit and 60% is paid in the month of purchase and 40% in the month following purchase. Budgeted inventory purchases are rchases of April May June $320,000 255,000 135,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $52,000 each month, (b) divictends of $135,000 will be paid in May, and (o) purchase of equipment in June for $70,000 cash Tecompany wishes to mantan a minnum cash balanc e of S0,000 at the end of each month. The company borrows money from the banks at 56%interest it necess that borrowed money in this case is for one month. the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on May was $46,400. Assume Propare a cash budget for the months of May and June. Propare separate schedules for expected collections from customers and expected payments for inventory REQUIRED: Present the analyois in a table. Click Save and Submit to savwe and submit. Click Save All Answers to sque all answers SaExplanation / Answer
Preparation of cash Budget:
May
June
Opening Cash Balance
80000
80000
Cash sales
255000
195000
Total collection from customers (Note 1)
128500
102250
Net cash received (A)
463500
377250
Total payments for purchase of inventory (Note 2)
281000
183000
Selling and Administrative expenses
52000
52000
Dividend
135000
-
Purchase of equipment
-
70000
Interest payment
156.8
395.07
Net cash payment (B)
468156.8
305395.065
Cash balance before borrowing (A-B)
-4656.8
71854.93
Borrowed amount
84656.8
8145.07
Closing Cash Balance
80000
80000
Expected collections from customers (Note 1)
April
May
June
Credit sales
135000
125000
90000
65% Collection (in the month of sale)
87750
81250
58500
35% Collection (following month sale)
-
47250
43750
Total collection from customers
87750
128500
102250
Expected payments for purchase of inventory (Note 2)
April
May
June
Inventory purchases
320000
255000
135000
60% payment in the month of purchase
192000
153000
81000
40% payment in the month following purchase
-
128000
102000
Total payments for purchase of inventory
192000
281000
183000
Interest for the month of May 2018 = (80000-46400)*5.6%*1/12 = 156.80
Interest for the month of June 2018 = 84656.8*5.6%*1/12 = 395.06
Preparation of cash Budget:
May
June
Opening Cash Balance
80000
80000
Cash sales
255000
195000
Total collection from customers (Note 1)
128500
102250
Net cash received (A)
463500
377250
Total payments for purchase of inventory (Note 2)
281000
183000
Selling and Administrative expenses
52000
52000
Dividend
135000
-
Purchase of equipment
-
70000
Interest payment
156.8
395.07
Net cash payment (B)
468156.8
305395.065
Cash balance before borrowing (A-B)
-4656.8
71854.93
Borrowed amount
84656.8
8145.07
Closing Cash Balance
80000
80000
Expected collections from customers (Note 1)
April
May
June
Credit sales
135000
125000
90000
65% Collection (in the month of sale)
87750
81250
58500
35% Collection (following month sale)
-
47250
43750
Total collection from customers
87750
128500
102250
Expected payments for purchase of inventory (Note 2)
April
May
June
Inventory purchases
320000
255000
135000
60% payment in the month of purchase
192000
153000
81000
40% payment in the month following purchase
-
128000
102000
Total payments for purchase of inventory
192000
281000
183000
Interest for the month of May 2018 = (80000-46400)*5.6%*1/12 = 156.80
Interest for the month of June 2018 = 84656.8*5.6%*1/12 = 395.06
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