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

1. Question printing error: Cash balance of sep end is printed as dec balance, so we assume it is a september end cash balance in hand.

2. question is not clear about the minimum cash balance policy, wheather it was started during previous quarters of the year OR is started during the current quarter of the year. So We assume it is start at current quarter of the budget.

3. Insurence is prepaid so assume already paid in advance at start of the year hence no outflow of cash, further depreciation is also a non cash expense item.

TOTAL CASH RECEIVED FROM CUSTOMERS BUDGETS OCT. NOV. DEC. Oct Collection From oct Sales 36000 From Sep Sales 10000 Total Oct Collection 46000 46000 Nov. Collection From Nov Sales From Oct. Sales Total Nov Collection 45000 32000 77000 77000 Dec Collection From Dec Sales From Nov Sales Total Dec Collection Total Quarter Collection 54000 15000 69000 69000 192000 PURCHASE PAYMENT BUDGET OCT. NOV. DEC. TOTAL Oct Purch. Payment From oct Purchase From Sep Purchase Total Oct Collection 12000 5000 17000 17000 Nov Purch. Payment Nov purchs. oct purchase Total Nov payment 38000 4000 42000 42000 Dec Purch. Payment For Dec Purch. For Nov purch. Total Dec Payments Total Quarter Payments for Purch. 25000 7000 32000 32000 91000 DEC. TOTAL 81550 69000 1505501408550 CASH BUDGET OCT. NOV. Beigning Cash balance 60000 75000 Cash Recipts 46000 77000 Cash Availaible 106000 Cash Payments For Purchase 17000 420001 For S & Adm. Exp. 15900 16250 For Additional Assets 10000 Total Cash Payments 42900 58250 Cash Balance before Financing(A) 63100 93750 Minimum Cash Condition 750001 75000 Cash Excess/-shortage - 11900 18750 FINANCING: Borrowings 11900 Principle Payments 11900 Interest Payments 99.17 Financing Effects(B) ol 12000 Ending Cash Balance(A-B) 75000 81750 320001 17400 0 49400 101150 75000 26150 150550 258000 225000 0 0 101150 11900 99.17 12000