Use the following information to prepare the Septemeber cash budget for PTO Manu

Question

Use the following information to prepare the Septemeber cash budget for PTO Manufacturing Co. The following information relates to expected cash reciepts and cash disbursements for the month ended September 30.

a. Beginning cash balance, September 1, $40,000.

b. Budgeted cash receipts from sales in September, $255,000.

c. Raw materials are purchased on account. Purchase amounts are: August (actual), $80,000, and September (budgeted), $110,000. Payments for direct materials are made as follows: 65% in the month of purchase and 35% in the month following purchase.

d. Budgeted cash disbursement for direct labor in September, $40,000.

e. Budgeted cash depreciation expense for September, $4,000.

f. Other cash expenses budgeted for September, $60,000.

g. Accrued income taxes payable in September, $10,000.

h. Bank loan interest payable in September, $1,000

Explanation / Answer

Statement showing cash Budget Particulars Amount Beginning Cash Balance            40,000.00 Budgeted Cash Receipts         255,000.00 Total Cash Available         295,000.00 Payment of Raw Mat purchases in Aug = 80,000*35%            28,000.00 Payment of Raw Mat purchases in Sep = 110,000*65%            71,500.00 Direct Labour Payment            40,000.00 Other Cash Expenses            60,000.00 Income Tax Paid            10,000.00 Bank Loan Interest Paid              1,000.00 Total Cash Disbursements         210,500.00 Closing Cash Balance            84,500.00

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