Question

Cash Disbursements
Assume that Waycross Manufacturing manages its cash flow from its home office. Waycross controls cash disbursements by category and month. In setting its budget for the next six months, beginning in July, it used the following managerial guidelines:

Category	Guidelines
Purchases	Pay half in current and half in following month.
Payroll	Pay 90 percent in current month and 10 percent in following month.
Loan Payments	Pay total amount due each month.

Predicted activity for selected months follow:

Category	May	June	July	August
Purchases	$30,000	$48,000	$52,000	$54,000
Payroll	100,000	130,000	140,000	100,000
Loan Payments	10,000	10,000	12,000	12,000

Prepare a schedule showing cash disbursements by account for July and August.

Waycross Manufacturing
Schedule of Cash Disbursements
For the Months of July and August

	July	August
Accounts payable
Payroll
Loan Payments
Total

Answer 1

Cash payment to Accounts payable

	July	August
For June purchase	48,000 x 1/2 = 24,000
For July purchase	52,000 x 1/2 = 26,000	52,000 x 1/2 = 26,000
For August purchase	0	54,000 x 1/2 = 27,000
Total	$50,000	$53,000

Cash payment for payroll

	July	August
For June Payroll	130,000 x 10% = 13,000
For July Payroll	140,000 x 90% = 126,000	140,000 x 10% = 14,000
For August Payroll	0	100,000 x 90% = 90,000
Total	$139,000	$104,000

	July	August
Accounts payable	50,000	53,000
Payroll	139,000	104,000
Loan Payments	12,000	12,000
Total	$201,000	$169,000

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