Question

Requirement 1 Cash receipt from customer's Budget Dec Total You are provided with the following Sales Budget, Purchases Budget and selling and administrative expenses budget for Salhiya World Co. for the last quarter of the year 2019. Nov Oct. Oct. Collections From Oct. Sales From Sep Sales Total Oct collection Nev, Cellections: Froem Nov. Sales From Oct Sales Total Nov collections Dec. Collections: From Dec. Sales Frem Nov. Sales Total Dec. collections Total cash receipt (ISles Budeet Tetal 135,000 45,000 180,000 Oct. 36,000 45,000 12.000 15,000 48,000 60,000 Nov Dec 54,000 18.000 Cash sales Credit sales 72,000 Total sales aneurchase Bdest Total 55,000 21,000 Dec Oct 12,000 Nov 18,000 Cash Purchases 25.000 4,000 7,000 16,000 25,000 10,000 35,000 Credit Purchases Total Purchases 76,000 Requirement 2 purchase payment Budget Nov Total Dec Oct (I)Sales& Administrative Exxpenses Budget Oct. parch. Payments: For Oct. Purch For Sep. Purch Total Oct. Purc. Pay Nov. parch. Payments For Nov. Purch For Oct. Purch Tetal Nov. Parch, Pay Dec. parch. Payments: For Dec. Purh For Nov, Purch Total Dec Purch. Pay Total Purchase Payments Oct Nov 9,000 Dec. Total 8,000 8,600 25,600 Salaries Sales Commissions 4,800 3,600 5,400 13,800 Rent Maintenance 500 S00 500 1,500 2.200 2.750 2,500 7,450 Insurance 360 120 120 120 Utilities 400 400 400 1.200 Depreciation Total 100 100 100 17,620 300 16,120 16,470 50,210 Requirement 3 Cash Budget Requirements: Assuming Salhiya world is planning to purchase new furniture for $10,000 cash during Oct. 2019. All cash expenses are paid when incurred except insurance espenses which is an expiration of prepaid. Oct Nov Dec. Total Begianing cash balance Cash reccipts Prepare the following budgets for the last quarter of the year 2019 Cash available Cash pamsnts 1-Collections from customers budget Assume all credit sales will be collected during the following month of sale. (Accounts Receivable at Sep.30, 2019 expected to be $10,000) For Purchases For S& Adm. Exp For Additional Assets Total cash paymants Cash balance before financing Minimum cash condition Cash Excess (Shortage) 2- Payments for purchases budget Assume all credit purchases will be paid during the following month of purchases (Accounts Payable at dSep 30 2019 is expected to be $5,000) 3- Cash budget assume the company wishes to maintain a minimum cash balance of $ 75,000 at the end of each month. To maintain the minimum cash balance, the company can borrow from the bank in $ 1.000 increments at %10 interest and the company should payback borrowed money when there an excess cash balance. (Cash balance at dec.31 2019 is expected to be $60,000) Financing Borowing Principle payment Interest Payment Financing Effect Ending Cash Balance

Answer 1

ANSWER:

As per the given Question

Cash receipt from customer's budget
	Oct	Nov	Dec	Total
Oct. collection
From oct. sales	$ 36,000.00
From sept. sales	$ 10,000.00
Total oct. collection	$ 46,000.00			$    46,000.00
Nov. collection
From nov. sales		$ 45,000.00
From oct. sales		$ 12,000.00
Total nov. collection		$ 57,000.00		$    57,000.00
Dec. collection
From dec. sales			$ 54,000.00
From nov. sales			$ 15,000.00
Total dec. collection			$ 69,000.00	$    69,000.00
Total cash receipt				$ 172,000.00

Purchase payment budget
				Oct	Nov	Dec	Total
Oct. purchase payment
For oct. purchase				$ 12,000.00
For sept. purchase				$    5,000.00
Total oct. purchase payment				$ 17,000.00			$ 17,000.00
Nov. purchase payment
For nov. purchase					$ 18,000.00
For oct. purchase					$    4,000.00
Total nov. purchase payment					$ 22,000.00		$ 22,000.00
Dec. purchase payment
For dec. purchase						$ 25,000.00
For nov. purchase						$    7,000.00
Total dec. purchase payment						$ 32,000.00	$ 32,000.00
Total purchase payments							$ 71,000.00

Cash Budget
			Oct	Nov	Dec
Beginning cash balance			$    75,000.00	$    75,000.00	$    75,000.00
Cash receipts			$    46,000.00	$    57,000.00	$    69,000.00
Cash available			$ 121,000.00	$ 132,000.00	$ 144,000.00
Cash payments
For purchase			$    17,000.00	$    22,000.00	$    32,000.00
For Sales & Adm. Exp			$    16,020.00	$    16,370.00	$    17,520.00
For additional asset			$    10,000.00
Total cash payment			$    43,020.00	$    38,370.00	$    49,520.00
Cash balance before financing			$    77,980.00	$    93,630.00	$    94,480.00
Minimum cash condition			$    75,000.00	$    75,000.00	$    75,000.00
Financing
Borrowing
Principle payment			$    (2,980.00)	$ (18,630.00)	$ (34,480.00)
Interest payment
Financing effect			$    (2,980.00)	$ (18,630.00)	$ (34,480.00)
Ending cash balance			$    75,000.00	$    75,000.00	$    60,000.00

Note: 1)Since the opening balance of cash for the month of October is not given, it has been assumed that the company is maintaining $ 75,000 as ending balance each month, except for the month of Dec, in which $ 60,000 is given as closing cash balance.

2) From sales and administration expenses, depreciation has been excluded as depreciation is a non- cash expense and shall not be considered while preparing cash budget.

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