Question

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Student Enterprises has the following business transaction estimates relating to the first quarter of 2019. JAN. FEB March Credit Sales Cash Sales Receipts from Accounts Receivable '1. Wages Office Furniture Prepayments Administrative Expense Depreciation on Office Furniture Receipt of Loan Credit Purchases Payments of Accounts Payable 2. Accrued Expenses Notes 120000 35000 calculate 35000 5000 140000 40000 calculate 35000 7000 160000 43000 calculate 35000 0 4250 15000 4000 0 52000 0 15000 4000 16000 4000 150000 49000 calculate 0 47000 calculate calculate 0 0 7600 ·Actual Receipts from Accounts Receivable are 70% of the previous months Credit Sales and the balance of 30% owing is received in the following month. Credit Sales for December 2018 were S100,000 as they were in November 2018. Cash Sales were $20,000 in November and December of 2018. 2. Payment of Accounts Payable is paid 60% of purchases in the month of purchase and the remaining 40% in the month following. Purchases in December 2018 were $44,000. 3 The cash balance at 1 January 2019 was $79 550.

Prepare a cash budget month by month for the quarter ending 31 March 2019.

Answer 1

Student Enterprises Cash Budget For the months ended January, February, March, 2019
	January	February	March	Quarter
Beginning Cash Balance	$ 79,550	$ 113,750	311,550	$ 79,550
Add: Expected Cash Receipts from Customers	135,000	154,000	177,000	466,000
Receipt of Loan	0	150,000	0	150,000
Total Cash Available	$ 214,550	$ 417,750	$ 488,550	$ 695,550
Less: Cash Disbursements
Payments of Accounts Payable	45,800	48,200	50,800	144,800
Wages	35,000	35,000	35,000	105,000
Administrative Expense	15,000	16,000	15,000	46,000
Purchase of Equipment	5,000	7,000	0	12,000
Prepayments	0	0	4,250	4,250
Total Disbursements	100,800	106,200	105,050	312,050
Cash Surplus ( Deficit)	113,750	311,550	383,500	383,500
Ending Cash Balance	$113,750	$ 311,550	$383,500	$383,500

Workings:

1. Schedule of Expected Cash Collections from Customers:

	January	February	March
Cash Sales	35,000	40,000	43,000
Collection of Credit Sales
November	30,000	0	0
December	70,000	30,000	0
January	0	84,000	36,000
February	0	0	98,000
Total Expected Collections	$ 135,000	$ 154,000	$ 177,000

2. Schedule of Expected Cash Disbursements for Purchases:

	January	February	March
Cash disbursements for purchases of
December	17,600	0	0
January	28,200	18,800	0
February	0	29,400	19,600
March	0	0	31,200
Total Expected Cash Disbursements	$ 45,800	$ 48,200	$ 50,800