someone explain to me how to find cash balance, beginning from February to march and other steps
Hillyard Company
Cash Budget
Hillary Company |
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Cash Budget |
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January |
February |
March |
Quarter |
|
Beginning Cash Balance |
$49,000 |
$32,600 |
$32,950 |
$49,000 |
Expected Cash Collection |
$300,000 |
$412,000 |
$482,000 |
$1,194,000 |
Available Cash |
$349,000 |
$444,600 |
$514,950 |
$1,243,000 |
Cash Disbursements: |
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for Purchases |
$219,000 |
$266,250 |
$210,000 |
$695,250 |
for salaries and wages |
$25,000 |
$25,000 |
$25,000 |
$75,000 |
Advertising |
$71,000 |
$71,000 |
$71,000 |
$213,000 |
Shipping (5% of sales) |
$19,000 |
$27,000 |
$12,500 |
$58,500 |
Other expenses (3% of sales) |
$11,400 |
$16,200 |
$7,500 |
$35,100 |
Purchase of Copy Machine |
$0 |
$6,200 |
$0 |
$6,200 |
Purchase of Equipment |
$0 |
$0 |
$78,000 |
$78,000 |
Cash Dividends |
$47,000 |
$0 |
$0 |
$47,000 |
Total Disbursements |
$392,400 |
$411,650 |
$404,000 |
$1,208,050 |
Excess/ (Deficiency) |
($43,400) |
$32,950 |
$110,950 |
$34,950 |
Financing: |
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Borrowings |
$76,000 |
$0 |
$0 |
$76,000 |
Repayments |
$0 |
$0 |
($76,000) |
($76,000) |
Interest |
$0 |
$0 |
($1,520) |
($1,520) |
Total Financing |
$76,000 |
$0 |
($77,520) |
($1,520) |
Ending Cash Balance |
$32,600 |
$32,950 |
$33,430 |
$33,430 |
= 43,400 + 32,000 = 75,400 rounded to nearest 1,000 would be $76,000
Expected Cash Collection: |
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January |
February |
March |
Quarter |
|
Accounts Receivable as on Dec 31 |
$224,000 |
$224,000 |
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January Sales - |
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Cash (20% x 380,000) |
$76,000 |
$76,000 |
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Credit (80% x 380,000) |
$304,000 |
$304,000 |
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February Sales - |
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Cash (20% x 540,000) |
$108,000 |
$108,000 |
||
Credit (80% x 540,000) |
$432,000 |
$432,000 |
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March Sales - |
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Cash (20% x 250,000) |
$50,000 |
$50,000 |
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Total Cash Collection |
$300,000 |
$412,000 |
$482,000 |
$1,194,000 |
Note: Cash collections for each month are a sum of cash sales + collections from credit sales of previous month.
For instance, cash collections for January = cash sales in January (20% of budgeted sales) + collection of credit sales of previous month, which equals to the accounts receivable balance at the end of December.
Purchases = budgeted cost of goods sold + desired ending inventory – beginning inventory
Budgeted cost of goods sold = budgeted sales (actual sales) – gross margin
Gross margin = 40%
Hence, budgeted cost of goods sold = budgeted sales (actual sales) – 40% of budgeted sales
Budgeted cost of goods sold = 60% of budgeted sales
For instance, budgeted cost of goods sold for January = 60% x 380,000 = $228,000
Desired ending inventory = 25% of cost of goods sold of following month
Desired ending inventory for January = 25% of February’s COGS
= 25% x (60% x 540,000) = $81,000
Beginning inventory for any month = ending inventory of previous month
Beginning inventory for January = ending inventory of December
= 25% x (60% x 380,000) = $57,000
Desired ending inventory for March = 25% of COGS of April
= 25% x (60% x 180,000) = $27,000
Inventory Purchases Budget –
Inventory Purchases Budget |
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January |
February |
March |
Quarter |
|
Budgeted Cost of Goods Sold (60% of sales) |
$228,000 |
$324,000 |
$150,000 |
$702,000 |
Add: Desired ending inventory (25% of Next month's COGS) |
$81,000 |
$37,500 |
$27,000 |
$145,500 |
Total |
$309,000 |
$361,500 |
$177,000 |
$847,500 |
Less: Beginning inventory |
($57,000) |
($81,000) |
($37,500) |
($175,500) |
Inventory Purchases |
$252,000 |
$280,500 |
139,500 |
$672,000 |
Payment for Purchases: |
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January |
February |
March |
Quarter |
|
Accounts Payable for December |
$93,000 |
$93,000 |
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payment for purchases(50% of inventory purchases) |
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Payment for January purchases |
$126,000 |
$126,000 |
$252,000 |
|
Payment for February purchases |
$140,250 |
$140,250 |
$280,500 |
|
Payment for March Purchases |
$69,750 |
$69,750 |
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Total payment for purchases |
$219,000 |
$266,250 |
$210,000 |
$695,250 |
Note: payment for inventory purchases = 50% in current month and 50% in following month
Payment for January inventory purchases = 50% x 252,000 = $126,000 in January
The remaining 50% is paid in February as follows, 252,000 x 50% = $126,000
Likewise, payment for other months is determined.
someone explain to me how to find cash balance, beginning from February to march and other...
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