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: $65,000. b. Cash receipts from sales: 25% is collected in the month of sale, 50% in the next month, and 25% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are May (actual), $1,980,000, June (actual), $1,330,000; and July (budgeted), $1,590,000. c. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $430,000; and July (budgeted). $580,000 d. Budgeted cash payments for salaries in July: $210,000. e. Budgeted depreciation expense for July: $12,000. f. Other cash expenses budgeted for July: $150,000. g. Accrued income taxes due in July: $90,000. h. Bank loan interest paid in July: $9,000. Calculation Cash Budget Calcu ate the budgeted cash receipts and cash payments. Calculation of Cash Receipts from Sales -----------------Collected in----------------- Total Sales May June July July 31 Accounts Rec. Credit sales from: $ 1,980,000 1.330,000 1.590,000 4,900,000 Tatals $ $ 0 $ 0 S Caloulation of Cash Payments for Merchandise .. . Paid in---- ---- Total Purchases June July July 31 Accounts Pay Purchases from: $ July Total 430,000 580.000 1,010,000 = 0 0 Calculation Cash Budget Prepare the July cash budget for Acco Co. ACCO CO. Cash Budget For the Month Ended July 31 Total cash available Cash payments for: Total cash payments

Answer 1

		Calculation of cash receipts from sales
						31-Jul
		Total	May	June	July	Accounts
		sales				receivable
Credit sales from:
	May	1,980,000	495000	990000	495000	0
	June	1,330,000		332500	665000	332,500
	July	1,590,000			397500	1,192,500
	totals	4,900,000	495000	1322500	1557500	1,525,000
		Calculation of Cash payments for merchandise
						31-Jul
		total	June	July		Accounts
		purchases				payable
purchases from:
June		430,000	258000	172000		0
July		580,000		348000		232000
totals		1,010,000	258000	520000		232,000
		Cash budget
Beginning cash balance				65,000
Cash receipts from sales				1557500
total cash available					1,622,500
Cash disbursements:
payments for merchandise				520000
Salaries				210,000
other expenses				150,000
Accrued taxes				90,000
interest on bank loan				9,000
total cash disbursements					979,000
Ending cash balance					643,500