Sales for October, November, and December are expected to be $200,000, $180,000,

ID: 2503627 • Letter: S

Question

Sales for October, November, and December are expected to be $200,000, $180,000, and $220,000,

respectively, for the Gurumai Company. All sales are on account (terms 2/15, net 30 days) and are

collected 50 percent in the month of sale and 50 percent in the following month. One-half of all sales

discounts are taken on the average. Materials are purchased one month before being needed, and all

purchases and expenses are paid for as incurred. Activities for the quarter are expected to be:

October November December

Materials used $40,000 $36,000 $44,000

Salaries 70,000 68,000 72,000

Maintenance and repairs 18,000 18,000 18,000

Depreciation 36,000 36,000 36,000

Utilities and other 14,000 14,000 14,000

Dividends paid -0- 10,000 -0-

Payment on bonds 8,000 8,000 8,000

Required:

Using the given information, prepare a cash budget for November.

sales budget:

cash collected through sales: 50%*180000 + 50%*200000 = 190000

- cash discount 1/2 *(2%*190000) = -1900

net proceed from sales: 188100

less: all cash expense:

Materials for december= -44,000

Salaries -68,000

Maintenance and repairs - 18,000

Utilities and other - 14,000

Dividends paid -10,000

Payment on bonds - 8,000

net cash balance: 26100

#depreciation is a non cash expense so will be ignored

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