Bult-Tight is preparing Its master budget for the quarter ended September 30, 20

Question

Bult-Tight is preparing Its master budget for the quarter ended September 30, 2015. Budgeted sales and cash payments for product costs for the quarter follow JulyAugustSeptember $ 57,500 $73,500 $ 54,500 Budgeted sales Budgeted cash payments for Direct materlals Direct labor Factory overhead 15,860 3,740 19,900 13,140 3,060 13,460 3,140 16,900 16. 500 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet Includes balances of $15,.000 in cash: $44.700 In accounts recelvable: $4.200 In accounts payable ('included In cash payments for direct materials) and a $4,700 balance In loans payable. A minimum cash balance of $15,000 Is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest Is 1% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists. loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,700 per month), and rent ($6,200 per month)

Explanation / Answer

Solution:

1) Preparing the Cash Receipts Budget for July, August and September:

Built-Tight Company

Cash Receipt Budget

For the Month of July, August and September

2) Preparing the Cash Budget for Each of the Months of July, August and September:

Built-Tight Company

Cash Budget

For The Month of July, August and September

Built-Tight Company

Cash Receipt Budget

For the Month of July, August and September

July August September Sales $57,500 $73,500 $54,500 Less: Accounts Receviable Ending $46,000 $58,800 $43,600 Cash Receipts From: Cash Sales $11,500 $14,700 $10,900 Prior month cash collection $44,700 $46,000 $58,800 Total Cash Receipts $56,200 $60,700 $69,700

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