Question

Prepare Cash Budget from Budgeted Transactions

Prepare a cash budget for the month ended May 31, 2019. Campton Company anticipates a cash balance of $97,000 on May 1, 2019. The following budgeted transactions for May 2019 present data related to anticipated cash receipts and cash disbursements:

1. For May, budgeted cash sales are $73,000 and budgeted credit sales are $513,000. (Credit sales for April were $450,000.) In the month of sale, 40% of credit sales are collected, with the balance collected in the month following sale.

2. Budgeted merchandise purchases for May are $293,000. (Merchandise purchases in April were $240,000.) In the month of purchase, 70% of merchandise purchases are paid for, and the balance is paid for in the following month.

3. Budgeted cash disbursements for salaries and operating expenses for May total $178,000.

4. During May, $25,000 of principal repayment and $4,000 of interest payment are due to the bank.

5. A $20,000 income tax deposit is due to the federal government during May.

6. A new delivery truck will be purchased during May for $7,800 cash and an $8,000 note payable. Depreciation for May will be $560.

Prepare a cash budget for Campton Company for the month of May 2019.

Campton Company Cash Budget For the Month Ended May 31, 2019
Beginning cash balance		Answer
Cash receipts:
Cash sales		Answer
Collections on credit sales		Answer
Cash available		Answer
Cash disbursements:
Payments for merchandise		Answer
Salaries and operating expense payments		Answer
Principal and interest payment		Answer
Income tax deposit		Answer
Payment on truck		Answer
Total cash disbursements		Answer
Ending cash balance		Answer

Answer 1

Solution Campton company Cash Budget for the Month Ended May 31, 2019 Amount ( 97,000 73,000 475, doo 645,200 277,100 Beginning Cash Balance lash Receipts. Cash sales collection from (redit sales Cash Available Cash Disbursements; Payment for Merchandise Salaries and operating expense payments Principal and Interest payment Income Tax Deposit Payment on truck Total cash Disbursement Ending cach Balance (loch Available - lach Disbusse, 172,000 29,000 20,000 7,600 511,900 133,300 mert

Wooking Notes' 0 Collection on credit sale - to be LAPSERS Budgeted Credit sales (May) = $513,000 40% of credit sales collected in cash in May =. yox 513,000 = $ 205,200 coedit sales (April) - $450,000 40% of credit sales of Apsil collected in April month and remaining 6o4. collected in May of so, 60 x $450,000 - $270,000 Total collection on credit sale a $ 205, 900 +$270,000 = $ 475,200 0 Payment for Merch andise - Purchase (May)= $293,000 70%. of Purchases made in cash = 70, $293,000 1. in May = $205,100 Purchases (April)= $240,000 30% of purchases of April month to be paid in May & Yoox $240,000 = $78,000 Total Payment for merchandise- $ 205,100+$72,000 : $ 277,100

other points> = - that Depreciation is a non cash expense is not included in cash budget. Payment on truck will be made only $7,800 in cash so, in cash budget , only $7,800 is written.