Below are budgeted data for Flour International: Sales Purchases October $ 50,00

Question

Below are budgeted data for Flour International:

Sales    Purchases

October    $ 50,000    $ 20,000

November    70,000 60,000

December    100,000 50,000

All sales are on credit. 60% of the sales are collected in the month of sale and the remaining in the month following the sale.

30% of purchases are paid in the month of purchase and 70% in the following month.

Operating expenses are $40,000; which includes depreciation of $2,000 and property tax expense of $3,000.The property taxes were paid in July of the current year.

Cash balance, December 1 is $12,000

Required: By preparing a cash budget, calculate the cash balance on December 31.

Explanation / Answer

cash balance on December 31.              8,000.00 Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Beginning cash balance, Dec 01         12,000.00 Add Receipts Collection of November sales = 70,000*40%         28,000.00 Collection of December sales = 100,000*60%         60,000.00 Total collections         88,000.00 Less Payments Payment of November purchases = 60000*70%         42,000.00 Payment of December purchases = 50000*30%         15,000.00 Payment of operating expenses = 40000-2000-3000         35,000.00 Total Payments         92,000.00 Ending Cash balance = 12000 + 88000 - 92000            8,000.00

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