Question

Required information Problem 22-2A Manufacturing: Cash budget LO P2 [The following information applies 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 $56,500 $ 72,500 September $ 55,500 Budgeted sales Budgeted cash payments for Direct materials Direct labor Factory overhead 15,660 3,540 19,700 12,940 2,860 16,300 13,260 2,940 16,700 Sales are 20% cash and 80% 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; $44,500 in accounts receivable; $4,000 in accounts payable; and a $4,500 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, loans 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 ($3,500 per month), and rent ($6,000 per month).

Answer 1

Solution

BUILT-TIGHT
Cash Budget
for July, August and September
	July	August	September
Beginning Cash Balance	$          15,000	$           15,000	$           23,027
Add: Collection from Sales and receivables	$          55,800	$           59,700	$           69,100
Total Cash Available	$          70,800	$           74,700	$           92,127
Cash Payments For
Direct material	$          15,660	$           12,940	$           13,260
Direct Labor	$             3,540	$             2,860	$             2,940
Overheads	$          19,700	$           16,300	$           16,700
Sales Commission	$             5,650	$             7,250	$             5,550
Office salaries	$             3,500	$             3,500	$             3,500
Rent	$             6,000	$             6,000	$             6,000
Interest on loan	$                   45	$                   28	$                    -
Total Cash Payments	$          54,095	$           48,878	$           47,950
Preliminary Cash Balance	$          16,705	$           25,822	$           44,177
Loan Taken (Repaid)	$          (1,705)	$           (2,795)	$                    -
Ending Cash Balance	$          15,000	$           23,027	$           44,177
Loan Balance
Loan Balance	$             4,500	$             2,795	$                    -
Additional Loan (Loan Repayment)	$          (1,705)	$           (2,795)
Loan Balance End of Month	$             2,795	$                    -	$                    -