Question

Requirements 1. Prepare a cash budget for April for Pet Transport. 2. Why do Pet Transport's managers prepare a cash budget in addition to the revenue, expenses, and operating income budget? Requirement 1. Prepare a cash budget for April for Pet 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 "O" for repayment of loan if excess cash does not exceed $10,000 at the end of April.) Cash Budget April 30 Cash balance, beginning Add receipts INTE Total cash available for needs

Answer 1

Prepare a cash budget for April for Pet Transport? Answer: Amount $ 5,200.00 $ 16,610.00 $ 145,005.30 $ 166,815.30 Cash Budget April 30 Description Computation Cash balance, beginning Add receipts Cash sales (166100*10%) Credit card sales (166100*90%*97%) Total cash available for needs Deduct disbursements Direct materials (8900+(13190*50%)) Direct manufacturing labor costs Manufacturing overhead (68580-22500) Non manufacturing costs (35661-12500) Replaced machine net cash cost Income taxes Cash available Interest on loan (2800*24%*1/12) Repayment of loan Net cash available after repayment $ 15,495.00 $ 39,200.00 $ 46,080.00 $ 23,161.00 $ 13,800.00 $ 5,100.00 $ 23,979.30 $ 56.00 $ 2,800.00 $ 21,123.30 Please give thumbsup button if this solution helped. If you need any further explanation, kindly request in the comment section, glad to be helpful.

Cash Budget is an expected cash receipts and cash payments. It gives a complete idea about the company's cash position in the future. This budget also involves using the other budgets like revenue and expenses budget. Preparing the revenue and expense budget makes us to realize the estimated revenue and expenses but the actual cash position to pay that expenses cannot be known without cash budget because the realization of revenue and liability to pay expenses will be on different dates. Here only take example of direct materials payment, we purchase in this month and pay half of the amount in next month, Depreciation expense is a nominal amount that doesn't require to be paid. Hence preparing cash budget in addition to revenue and expense budget is necessary to find out the cash position whether the company is in a position to pay its liabilities when they are due.