Help Save Castor, Inc., is preparing its master budget for the quarter ended Jun
ID: 2511305 • Letter: H
Question
Help Save Castor, Inc., is preparing its master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the Sales $31,600 $40,400 $24,400 21,000 16,400 16,800 Sales are 65% cash and 35% on credit. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $12,400 in cash, $12,400 in accounts recelvable, $11,000 in accounts payable, and a $2,400 balance in loans payable. A minimum cash balance of $12,400 is required. Loans are obtained at the end of any month when a cash shortage occurs Interest is t% per month based on the beginning of the month loan balance and is paid at each month-end, if an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and include sales commissions (10% of sales), shipping (2% of sales), office salaries ($3,400 per month), and rent($5,400 per month). Prepare a cash budget for each of the months of April, May, and June. (Negative balances and Loan repayment amounts (If any) should be indicated with minus sign. Round your final answers to the nearest whole dollar) Cash Budget MayExplanation / Answer
CASTOR, INC.
Cash Budget
April
May
June
Beginning cash balance
$12400
$12400
$16565
Cash sales (65% of total sales)
$20540
$26260
$15860
Collections on account (35% of total sales)
$12400
$11060
$14140
Total cash available
$45340
$49720
$46565
Cash disbursements;
Payment for merchandise
$21000
$16400
$16800
Sales commision (10% of sales)
$3160
$4040
$2440
Shipping cost (2% of sales)
$632
$808
$488
Office salaries
$3400
$3400
$3400
Rent
$5400
$5400
$5400
Interest on bank loan
$24
$31
$0
Total cash disbursements
$33616
$30079
$28528
Preliminary cash balance
$11724
$19641
$18037
Additional loan (Loan repayment)
$676
($3076)
$0
Ending cash balance
$12400
$16565
$18037
Loan Balance
April
May
June
Loan balance, Beginning of month
$2400
$3076
$0
Additional loan (Loan repayment)
$676
($3076)
$0
Loan balance, Ending of month
$3076
$0
$0
CASTOR, INC.
Cash Budget
April
May
June
Beginning cash balance
$12400
$12400
$16565
Cash sales (65% of total sales)
$20540
$26260
$15860
Collections on account (35% of total sales)
$12400
$11060
$14140
Total cash available
$45340
$49720
$46565
Cash disbursements;
Payment for merchandise
$21000
$16400
$16800
Sales commision (10% of sales)
$3160
$4040
$2440
Shipping cost (2% of sales)
$632
$808
$488
Office salaries
$3400
$3400
$3400
Rent
$5400
$5400
$5400
Interest on bank loan
$24
$31
$0
Total cash disbursements
$33616
$30079
$28528
Preliminary cash balance
$11724
$19641
$18037
Additional loan (Loan repayment)
$676
($3076)
$0
Ending cash balance
$12400
$16565
$18037
Loan Balance
April
May
June
Loan balance, Beginning of month
$2400
$3076
$0
Additional loan (Loan repayment)
$676
($3076)
$0
Loan balance, Ending of month
$3076
$0
$0
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