PARTIV: Cash Budget: Answer the following Problem [15 points] The following info
ID: 2572331 • Letter: P
Question
PARTIV: Cash Budget: Answer the following Problem [15 points] The following information pertains to Hepburn Company: Month January February March Sales $60,000 $80,000 $100,000 $32,000 $56,000 Cash is collected from customers in the following manner: Month of sale Month following the sale 30% 70% 40% of purchases are paid for in cash in the month of purchase, and the balance is paid the following month. Labor costs are 20% of sales. Other operating costs are $30,000 per month (including $8,000 of depreciation). Both of these are paid in the month incurred. The cash balance on March 1 is $8,000. A minimum cash balance of $6,000 is required at the end of the month. Money can be borrowed in multiples of $1,000. REQUIRED: Prepare the cash budget for the month of MarchExplanation / Answer
Answer
CASH COLLECTION from Sales
January
February
March
Sales
60000
80000
100000
Cash collected of--
January Sale
[30%] 18000
[70%] 42000
February Sale
[30%] 24000
[70%] 56000
March Sale
[30%] 30000
Total cash collected
18000
66000
86000
CASH PAYMENT for PURCHAES
January
February
March
Purchases
32000
40000
56000
Cash paid for purchases of---
January
[40%] 12800
[60%] 19200
February
[40%] 16000
[60%] 24000
March
[40%] 22400
Total cash paid
12800
35200
46400
OTHER EXPENSES
January
February
March
Sales
60000
80000
100000
Cash expenses
Labor cost (20% of sale)
12000
16000
20000
Operating expenses (excl Depreciation)
22000
22000
22000
Non cash expense
Depreciation
8000
8000
8000
CASH BUDGET
Month of March
Working
Amount $
Opening Cash balance on Mar 1
8000
Add: Collection from Sales
86000
A
Cash available
94000
Less: Cash expense
Cash paid for purchases
46400
Labor cost (20% of sale)
20000
Operating expenses
22000
B
Total expenses
88400
C=A-B
Excess of cash available over expenses
5600
D
Minimum requirement
6000
E=D-C
To be borrowed
400
F
Actually borrowed (as required to be borrowed in multiple of $1000)
1000
G=C+F
Closing Cash Balance
6600
CASH COLLECTION from Sales
January
February
March
Sales
60000
80000
100000
Cash collected of--
January Sale
[30%] 18000
[70%] 42000
February Sale
[30%] 24000
[70%] 56000
March Sale
[30%] 30000
Total cash collected
18000
66000
86000
CASH PAYMENT for PURCHAES
January
February
March
Purchases
32000
40000
56000
Cash paid for purchases of---
January
[40%] 12800
[60%] 19200
February
[40%] 16000
[60%] 24000
March
[40%] 22400
Total cash paid
12800
35200
46400
OTHER EXPENSES
January
February
March
Sales
60000
80000
100000
Cash expenses
Labor cost (20% of sale)
12000
16000
20000
Operating expenses (excl Depreciation)
22000
22000
22000
Non cash expense
Depreciation
8000
8000
8000
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