Beginning cash balance on July 1: $70,000. b. Cash receipts from sales: 10% is c

Question

Beginning cash balance on July 1: $70,000. b. Cash receipts from sales: 10% is collected in the month of sale, 50% in the next month, and 40% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $2,000,000; June (actual), $1,340,000; and July (budgeted), $1,360,000. c. Payments on merchandise purchases: 90% in the month of purchase and 10% in the month following purchase. Purchases amounts are: June (actual), $420,000; and July (budgeted), $500,000. d. Budgeted cash disbursements for salaries in July: $350,000. e. Budgeted depreciation expense for July: $15,000. f. Other cash expenses budgeted for July: $170,000. g. Accrued income taxes due in July: $60,000. h. Bank loan interest paid in July: $9,500.

Explanation / Answer

Financial Budget $ Particulars May June July Opening Cash 0 200000 70000 Cash Sales 0 0 0 Sale on Account 200000 134000 136000 Sale on Account of May 0 1000000 800000 Sale on Account of June 0 0 670000 Purchase on account 0 -378000 -450000 Purchase on account for June 0 0 -42000 Salary 0 0 -170000 Accrued income taxes 0 0 -60000 Bank Interest 0 0 -9500 Suspenes(Due to incomplete info) 0 -886000 0 Closing Balance 200000 70000 944500

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