Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

ed with the following budget information: May June July Sales Manufacturing cost

ID: 2546202 • Letter: E

Question

ed with the following budget information: May June July Sales Manufacturing costs 34,000 39,000 44,000 15,000 16,000 22000 Capital expenditures. he company expects to sell about 10% of its merchandise for cash, or sales on account, 70% are expected to be collected following month (second month following sale). Depreciat 80,000 in the month following the sale and the remainder tion, insurance, and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual mium is paid in September, and the annual property taxes are paid in November, Of the remainder of the remainder of the manufacturing costs, 8% are expected to be paid in the month in which they are incurred and the blance in the following month Current assets as of May 1 include cash of $33,000, marketable securities of $40,000, and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). I were $60,000 and $72,000, respectively. Current lablities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in June. Sonoma's regular uarterly dividend of $5,000 is expected to be declared in June and paid in July. Management desires to maintain a minimum cash balance of $30,000. equired Hide 1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2014. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Explanation / Answer

Answer a

Sales Budget

May Jun Jul Total

Sales 86,000.00 90,000.00 95,000.00 271,000.00

Cash Sales -10% 8,600.00 9,000.00 9,500.00 27,100.00

Credit Sales -90% 77,400.00 81,000.00 85,500.00 243,900.00

Answer b

Schedule of Expected Cash Collections from Sales

May Jun Jul Total

Cash Sales 8,600.00 9,000.00 9,500.00 27,100.00

Collection from Accounts Receivables

Mar Sales 18,000.00 18,000.00

Apr Sales 50,400.00 21,600.00 72,000.00

May Sales 54,180.00 23,220.00 77,400.00

June Sales 56,700.00 56,700.00

Total cash Collections 77,000.00 84,780.00 89,420.00 251,200.00

Answer c

Schedule of Cash payments to Manufacturing Expense

May Jun Jul Total

Cash Payment

Apr Exp. 6000 - 6,000.00

May Exp. 24,400.00 6,100.00 30,500.00

June Exp. - 28,400.00 7,100.00 35,500.00

July Exp, 32,400.00 32,400.00

Total Manufacturing Exp. Paid 24,400.00 34,500.00 39,500.00 98,400.00

Cash budget

May Jun Jul Total

Opening cash Balance 33,000.00 70,600.00 90,880.00 33,000.00

Add: receipts

Collection from Customers 77,000.00 84,780.00 89,420.00 251,200.00

Total Cash available 110,000.00 155,380.00 180,300.00 284,200.00

Less: Disbursements

Manufacturing Expense 24,400.00 34,500.00 39,500.00 98,400.00

Selling & Admn. Exp. 15,000.00 16,000.00 22,000.00 53,000.00

Capital Expenditure - - 80,000.00 80,000.00

Income Tax 14,000.00 14,000.00

Dividend Paid 5,000.00 5,000.00

Total Disbursement 39,400.00 64,500.00 146,500.00 250,400.00

Cash Balance Closing 70,600.00 90,880.00 33,800.00 33,800.00

Add: Finance from Bank - - -

Less: Payment to Bank - - - -

Less: Payment of interet - Bank loan - - - -

Net Cash Balance Closing 70,600.00 90,880.00 33,800.00 33,800.00