Use the following information to prepare determine the budgeted cash balance for

Question

Use the following information to prepare determine the budgeted cash balance for Arbor Company at the end of June. a. Beginning cash balance on June 1 is $52,000. b. Cash receipts from sales: 40% is collected in the month of sale, 50% in the next month, and 10% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000. c. Payments on merchandise purchases: 80% in the month of purchase and 20% in the month following purchase. Purchases amounts are May (actual), $830,000; and June (budgeted), $867,000. d. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000 e. Budgeted depreciation expense for June: $24,000. f. Other cash expenses budgeted for June: $282,000..

Explanation / Answer

Arbor Company Cash Budget for June A Beginning Cash (June 1) $         52,000 B Receipts: Collection from Sales (as per working note) $   16,25,000 C Payments: Payment for purchases (as per working note) $      8,59,600 D Expenses Cash disbursemnt of salaries for June $      2,60,000 Cash disbursemnt of outstanding salary of may $          60,000 $      3,20,000 E Other cah expenses $      2,82,000 Budgeted cash balance at the end of June (A + B -C-D-E) $      2,15,400 Note:   Depreciation is a non cash item Working Notes Value (in $) April May June A Sales        14,50,000        16,00,000         17,00,000 Collection from Sales B In the month(40% of (A))           5,80,000          6,40,000           6,80,000 C Next month (50% of previous month sales)          7,25,000 D Second month (10% of A)           8,00,000 Total Collection from sales (B + C +D)           1,45,000         16,25,000 Value (in $) April May June Purchases          8,30,000           8,67,000 Payment for Purchases 80% in the month          6,64,000           6,93,600 20% of the previous month           1,66,000 Total payment for purchases           8,59,600

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