Required information Problem 22-2A Manufacturing: Cash budget LO P2 The folowing

Question

Required information Problem 22-2A Manufacturing: Cash budget LO P2 The folowing information appies to the questions displayed below. Built-Tight is preparing Its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow: July August September $63,000 $79,000 49,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Factory overhead 16,360 13,640 13, 960 3, 640 20,400 17,000 17,400 4,240 3,560 Sales are 25% cash and 75% 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; $45,200 In accounts recelvable: $4,700 in accounts payable; and a $5,200 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, oans 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 ($4,200 per month, and rent ($6,700 per month). Problem 22-2A Part 2 2) Prepare a cash budget for each of the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Enter your final answers in whole dollars.) IGH Cash Budget For July, August, and September Au Beginning cash balance Total cash avai able Cash payments for: Total cash payments Preli cash balance Ending cash balance Au Loan balance Beginning of month Additional loan (loan Loan balance End month

Explanation / Answer

Built - Tight   Cash Budget   For July August and September       July   August September Beginning cash balance                 15,000                  15,000                26,473 Add: Cash receipt          -Collections of accounts receivable                 45,200                  47,250                59,250        -collection during the month -25% of sales                   15,750                  19,750                12,250 Total Cash Available                   75,950                  82,000                97,973 Cash payment for: Direct material                   16,360                  13,640                13,960 Direct Labour                     4,240                    3,560                   3,640 Factory overhead                   20,400                  17,000                17,400 Sales commission (10%) of sales                     6,300                    7,900                   4,900 Salaries                   4,200                    4,200                   4,200 Rent                     6,700                    6,700                   6,700 Interest on bank loan -1%                           52                          25                          -   Total cash payments                 58,252                  53,025                50,800 Preliminary cash balance                   17,698                  28,975                47,173 Surplus/shortage Financing activity   Borrowing repayment                     2,698                    2,502                          -   Ending cash balance                   15,000                  26,473                47,173     Loan Balance   July   August   September   Loan -Beginning balance                     5,200                    2,502                          -   Additional loan / Repayment                   -2,698                   -2,502                          -   Loan Balance - End of Month                     2,502                           -                            -   Working Note 1 Cash budget   July   August September Beginning cash balance                 15,000                  15,000                26,473 Add: Cash receipt       credit sales                   45,200                  47,250                59,250 (63000*75%) (79000*75%)      cash sales                   15,750                  19,750                12,250 (63000*25%) (79000*25%) (49000*25%)

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