Question

Assume the following data for Animal Transport Company

• Animal Transport (AT) does not make any sales on credit. AT sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AT gets the cash right away, less a 4% transaction fee. • Purchases of materials are on account. AT pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, AT owes suppliers $8,300. During April they plan to purchase direct materials worth $21,210. . AT plans to replace a machine in April at a net cash cost of $13,400. • Labor, other manufacturing costs, and nonmanufacturing costs are paid in cash in the month incurred except of course depreciation, which is not a cash flow. Depreciation is $22,000 of the manufacturing cost and $13,500 of the nonmanufacturing (fixed) cost for April. • AT currently has a $2,800 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If AT has more than $10,000 cash at the end of April it will pay back the loan. AT owes $5,000 in income taxes that need to be remitted in April. AT has cash of $5,900 on hand at the end of March.

REFERENCE REVENUE BUDGET

Requirement

Prepare a cash budget for April for Animal Transport. Begin the cash budget by calculating the cash available, then total disbursements, and finally the effects of financing and the ending cash balance. (Round your answers to the nearest whole dollar. Enter "0" for repayment of loan if excess cash does not exceed $10,000 at the end of April.)

Answer 1

Cash Budget April 30 -Cash Balance, begining 5900 Add areceipts Cash Sales Carod (190800X10%) 19080 164851 Ovidit, Sales (1908.600 x 90 %) – 4.v. [A] Total cash available for needs. - 189831 Deduct disbursements. Divieet makemials $4150 + 106051 74755 Direct Labour Budget 29000 Total Manufacturing expenses (1146804, 199680 22000) upon manufacturing cost (40408-13500 ) 26908 Replacing machinery 13400 Oncome tax (Bl total Disbursements. Cash excess [A-B] financing Repayment of loan - Interest on loan ($2800 x 12% x/2) 5000 181743 8088 28 closing Cash Balance $8060