Use the following information to prepare the July cash budget for Acco Co. It sh
ID: 2586036 • Letter: U
Question
Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month and the cash balance expected on July 31.
A. Beginning cash balance on July 1: $63,000.
B. Cash receipts from sales: 10% is collected in the month of sale, 50% in the next month, and 40% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,750,000; June (actual), $1,370,000; and July (budgeted), $1,410,000.
C. Payments on merchandise purchases: 85% in the month of purchase and 15% in the month following purchase. Purchases amounts are: June (actual), $560,000; and July (budgeted), $470,000.
D. Budgeted cash payments for salaries in July: $120,000.
E. Budgeted depreciation expense for July: $14,000.
F. Other cash expenses budgeted for July: $160,000.
G. Accrued income taxes due in July: $60,000.
Calculation Cash Budget Calculate the budgeted cash receipts and cash payments Calculation of Cash Receipts from Sales July 31 Accounts Rec. Collected in Total Sales May June July Credit sales from: May June July Totals $1,750,000 1,370,000 1,410,000 $4,530,000 $ Calculation of Cash Payments for Merchandise Paid in July 31 Total Purchases June July Accounts Pay Purchases from June July Totals 560,000 470,000 $1,030,000$Explanation / Answer
Calculation of Cash Receipts from sales
Collected in
Credit sales from'
Total Sales
May
June
July
May
1750000
175000
875000
700000
June
1370000
0
137000
685000
July
1410000
0
0
141000
Totals
4530000
175000
1012000
1526000
Calculation of Cash Payments for merchandise
Paid in
Total Purchases
June
July
Purchases from:
June
560000
476000
84000
July
470000
0
399500
Totals
1030000
476000
483500
ACCO Co.
Cash Budget
For the month ended July 31st
Opening Balance (A)
63000
Cash Sales (B)
1526000
Total Cash Available
cash Payments for:
Merchandise
483500
Salaries
120000
Bank Loan interest
7500
Other cash expenses
160000
Total Cash payments ©
771000
Cash Balance at the end (D = A+B-C)
818000
Note:
1) Depreciation being a non-cash expense will not appear in the Cash Budget.
2) Accrued income taxes due in july is not yet a cash expense, thus wll not appear in cash budget. Will be appearing in income statement however.
Calculation of Cash Receipts from sales
Collected in
Credit sales from'
Total Sales
May
June
July
May
1750000
175000
875000
700000
June
1370000
0
137000
685000
July
1410000
0
0
141000
Totals
4530000
175000
1012000
1526000
Calculation of Cash Payments for merchandise
Paid in
Total Purchases
June
July
Purchases from:
June
560000
476000
84000
July
470000
0
399500
Totals
1030000
476000
483500
ACCO Co.
Cash Budget
For the month ended July 31st
Opening Balance (A)
63000
Cash Sales (B)
1526000
Total Cash Available
cash Payments for:
Merchandise
483500
Salaries
120000
Bank Loan interest
7500
Other cash expenses
160000
Total Cash payments ©
771000
Cash Balance at the end (D = A+B-C)
818000
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