Exercise 186 (Part Level Submission) (a) SAVE FOR LATER SUBMIT ANSWER (b) The pa
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Question
Exercise 186 (Part Level Submission)
(a)
SAVE FOR LATER
SUBMIT ANSWER
(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
Exercise 186 (Part Level Submission)
Cruises, Inc. has budgeted sales revenues as follows:June July August Credit sales $135,000 $125,000 $ 90,000 Cash sales 90,000 255,000 195,000 Total sales $225,000 $380,000 $ 285,000
Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:
June $300,000 July 240,000 August 105,000
Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash.
The company wishes to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month.
(a)
Prepare a cash budget for the months of July and August. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)CRUISES, INC.
Cash Budget
For the Two Months of July and August
Cash SalesFinancingRepaymentsBorrowingsBeginning Cash BalanceEnding Cash BalanceReceiptsTotal ReceiptsCollections from CustomersTotal Available Cash
$ $AddLess
:Beginning Cash BalanceRepaymentsFinancingReceiptsBorrowingsEnding Cash BalanceTotal Available CashTotal ReceiptsCollections from CustomersCash Sales
Financing Borrowings Repayments Ending Cash Balance Beginning Cash Balance Receipts Collections from Customers Cash Sales Total Receipts Total Available Cash
Borrowings Total Receipts Financing Receipts Collections from Customers Cash Sales Repayments Ending Cash Balance Beginning Cash Balance Total Available Cash
Repayments Financing Total Receipts Beginning Cash Balance Total Available Cash Ending Cash Balance Collections from Customers Receipts Borrowings Cash Sales
ReceiptsTotal ReceiptsTotal Available CashCash SalesCollections from CustomersFinancingEnding Cash BalanceBorrowingsRepaymentsBeginning Cash Balance
AddLess
:Total DisbursementsSelling and Administrative ExpensesEquipment PurchaseDisbursementsDividendsExcess (deficiency) of available cash over disbursementsFinancingBorrowingsRepaymentsPurchases
Repayments Disbursements Dividends Purchases Excess (deficiency) of available cash over disbursements Borrowings Total Disbursements Selling and Administrative Expenses Equipment Purchase Financing
Repayments Equipment Purchase Financing Selling and Administrative Expenses Borrowings Total Disbursements Disbursements Purchases Dividends Excess (deficiency) of available cash over disbursements
Purchases Excess (deficiency) of available cash over disbursements Financing Dividends Borrowings Selling and Administrative Expenses Repayments Equipment Purchase Disbursements Total Disbursements
Disbursements Purchases Dividends Financing Repayments Total Disbursements Equipment Purchase Selling and Administrative Expenses Excess (deficiency) of available cash over disbursements Borrowings
Disbursements Purchases Selling and Administrative Expenses Excess (deficiency) of available cash over disbursements Financing Dividends Borrowings Equipment Purchase Repayments Total Disbursements
DividendsEquipment PurchaseExcess (deficiency) of available cash over disbursementsSelling and Administrative ExpensesTotal DisbursementsFinancingBorrowingsRepaymentsDisbursementsPurchases
RepaymentsPurchasesBorrowingsFinancingDividendsEquipment PurchaseDisbursementsEnding Cash BalanceSelling and administrative expensesTotal Disbursements
Purchases Equipment Purchase Total Disbursements Financing Borrowings Dividends Repayments Ending Cash Balance Disbursements Selling and administrative expenses
Purchases Dividends Financing Equipment Purchase Selling and administrative expenses Total Disbursements Disbursements Borrowings Repayments Ending Cash Balance
RepaymentsBorrowingsEnding Cash BalanceDisbursementsPurchasesSelling and administrative expensesEquipment PurchaseDividendsTotal DisbursementsFinancing
$ $ Attempts: 0 of 1 usedSAVE FOR LATER
SUBMIT ANSWER
(b)
The parts of this question must be completed in order. This part will be available when you complete the part above.
Explanation / Answer
CRUISES, INC. Cash Budget For the Two Months of July and August July August Beginning Cash Balance 50000 50000 Add: Receipts Cash Sales 255000 195000 Collections from Customers 129000 104000 (135000*40%)+(125000*60%) (125000*40%)+(90000*60%) Total Available Cash 434000 349000 Less: Disbursements Purchases 270000 172500 (300000*50%)+(240000*50%) (240000*50%)+(105000*50%) Equipment Purchases 0 30000 Dividends 103000 0 Selling and administrative expenses 48000 48000 Total Disbursements 421000 250500 Excess (deficiency) of available cash over disbursements 13000 98500 Financing: Borrowings 37000 0 Repayments 0 -37185 (37000+37000*6%*1/12) Ending Cash Balance 50000 61315
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