Question

The treasure of Unisyms Company has accumulated the following budget information for the first two months of the coming year:

March April
Sales $450,000 $520,000
Manufacturing $290,000 $350,000
Selling &Admin. expenses $41,000 $46,4000
Capital additions $250,000 -------

The company expects to sell about 35% of its merchandise for cash of sales on account 80% are expected to be collected in full in the month of the sale andremainder in the month following the sale. One-fourth of the manufacturing costs are expected to be paid in the month in which they are incurred and the otherthree-fourth in the following month. Depreciation, insurance, and property taxes represents $64,400 of the probable monthly selling and administrative expenses.Insurance is paid in April. Of the remainder of the selling and administrative expenses, one-half are expected to be paid in the month in which they are incurred,with the balance paid in the following month. Capital additions of $250,000 are expected to be paid in March. Current assets of March 1 are composed of accountspayable of $121,500($102,2000 for materials purchases and $19,5000 for operating expenses). Management desires to maintain a minimum cash balance of $20,000.

Prepare a monthly cash budget for March and April

Answer 1

Monthly cash budget for March and April.
============================================
MarchApril
Budgeted Cash Receipts :

Cash Sales
$450,000 x35%$157,500
$520,000 x35%$182,000

Collections of A/R
($450,000x65%x80%) + $51,000$285,000
($520,000x65%x80%) +
($450,000x65%x20%)$328,900
TotalReceipts$442,500 $510,900

Budgeted Cash Payments
Manufacturing costs
($290,000 x1/4)+$102,000 $174,500
($350,000x1/4)+($290,000x3/4)$305,000

Selling &Administrative expenses
($41,400-$6,400)/2 + $19,500 $37,000
($46,400-$6,400)/2 +$19,500$37,500
Capitaladditions$250,000 ----

IncomeTaxes---- $40,000
Total Cash payments$461,500$382,500
Cash Increase / (decrease) ($19,000)$128,400
Beginning cash balance$45,000 $26,000
Ending cashbalance$26,000$154,400
Minimum Cash balance required $20,000 $20,000
Excess /(deficiency)$6,000$134,400