La Famiglia’s cash balance on October 1 is $2,147. It has provided the following
ID: 2567650 • Letter: L
Question
La Famiglia’s cash balance on October 1 is $2,147. It has provided the following information for the month of October:
Sales are budgeted to be $157,000. 85% of sales are cash; the remainder are credit. Credit sales are collected in the month following sale.
Food and supply purchases are expected to be $120,000. La Famiglia pays 25% in the month of purchase, and 75% in the month following.
Other expenses include the following: Salaries of $9,200, Utilities of $4,950, Rent of $3,600, Depreciation of $900, and Insurance of $1,200. Other expenses are paid in the month incurred.
September sales were $181,500, and purchases of food and supplies in September were $150,000.
La Famiglia would like to maintain a minimum cash balance of $2,000. Borrowings, if needed, are made in $1,000 increments at 1% interest per month.
Prepare a combined cash budget for the month of October.
SHOW WORK PLEASE
Explanation / Answer
Prepare cash budget :
Beginning cash balance 2147 Add: Cash receipts Cash sales (157000*85%) 133450 Collection from customer (181500*15%) 27225 Total cash receipts 160675 Total Cash available 162822 Less: Cash payment Food and supply purchase (120000*25%)+(150000*75%) 142500 Other expenses (salaries, utilities, rent & insurance) 18950 Total cash payment 161450 Excess (deficiency) over cash disbursement 1372 Borrowing (repayment) 1000 Ending cash balance 2372Related Questions
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