4. Bella Inc. would like to prepare a summary cash budget for June. The followin

Question

4. Bella Inc. would like to prepare a summary cash budget for June. The following information is available: The cash balance at June 1 was estimated to be $6,000. June sales, all on account, were estimated to be $75,000. Sales are collected over a two-month period with 60 percent collected in the month of sale and the remainder in the subsequent month. May sales on account were $70,000 Inventory purchases are expected to be $50,000 in June. The company pays for one- half of inventory purchases in the month of purchase and the remainder in the subsequent month. May purchases were S60,000. Cash disbursements for selling and administrative expenses are expected to be $9,000 in June. Depreciation expense for June is expected to be $3,000. · What is the cash balance at the end of June expected to be? a. $15,000 b. $12,000 c. $26,000 d. $29,000 5. Dallas Company has an unfavorable materials price variance. Which of the folowing would be the least likely reason for this variance?

Explanation / Answer

Cash collected for sales = 40% of May sales + 60% of June sales = 40% *70000 + 60% *75000 = 73000

Cash paid for purchases =50% of May purchases + 50% of June purchases = 50% * 60000 + 50% * 50000 = 55000

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