Question

Cash Budget The controller of Feinberg Company is gathering data to prepare the cash budget for...

Cash Budget

The controller of Feinberg Company is gathering data to prepare the cash budget for July. He plans to develop the budget from the following information:

  1. Of all sales, 40% are cash sales.
  2. Of credit sales, 45% are collected within the month of sale. Half of the credit sales collected within the month receive a 2% cash discount (for accounts paid within 10 days). Thirty percent of credit sales are collected in the following month; remaining credit sales are collected the month thereafter. There are virtually no bad debts.
  3. Sales for the second two quarters of the year follow. (Note: The first three months are actual sales, and the last three months are estimated sales.)
               Sales
    April $ 450,000
    May 580,000
    June 900,000
    July 1,140,000
    August 1,200,000
    September 1,134,000
  4. The company sells all that it produces each month. The cost of raw materials equals 26% of each sales dollar. The company requires a monthly ending inventory of raw materials equal to the coming month's production requirements. Of raw materials purchases, 50% are paid for in the month of purchase. The remaining 50% is paid for in the following month.
  5. Wages total $105,000 each month and are paid in the month incurred.
  6. Budgeted monthly operating expenses total $376,000, of which $45,000 is depreciation and $6,000 is expiration of prepaid insurance (the annual premium of $72,000 is paid on January 1).
  7. Dividends of $130,000, declared on June 30, will be paid on July 15.
  8. Old equipment will be sold for $25,200 on July 4.
  9. On July 13, new equipment will be purchased for $173,000.
  10. The company maintains a minimum cash balance of $20,000.
  11. The cash balance on July 1 is $27,000.

Required:

Prepare a cash budget for July. Give a supporting schedule that details the cash collections from sales.

Feinberg Company
Cash Budget
For the Month of July
Beginning cash balance $
Collections:
Cash sales
Credit sales:
July:
With discount
Without discount
June
May
Sale of old equipment
Total cash available $
Less disbursements:
Raw materials:
July $
June
Direct labor
Operating expenses
Dividends
Equipment
Total disbursements $
Minimum cash balance
Total cash needs $
Excess of cash available over needs $
Ending cash balance $
0 0
Add a comment Improve this question Transcribed image text
Answer #1
Feinberg Company
Cash Budget
For the Month of July
Beginning cash balance 27000
Collections:
Cash sales (40% x $1140000) 456000
Credit sales:
July:
With discount (1/2 x $1140000 x 60% x 45% x 98%) 150822
Without discount (1/2 x $1140000 x 60% x 45%) 153900
June ($900000 x 60% x 30%) 162000
May ($580000 x 60% x 25%) 87000
Sale of old equipment 25200
Total cash available 1061922
Less disbursements:
Raw materials:
July 156000
June 148200
Direct labor 105000
Operating expenses ($376000 - $45000 - $6000) 325000
Dividends 130000
Equipment 173000
Total disbursements 1037200
Minimum cash balance 20000
Total cash needs 1057200
Excess of cash available over needs 4722
Ending cash balance 24722

Working:

Raw materials:

April May June July August
Cost of goods sold (26% x $900000);(26% x $1140000);(26% x $1200000) 117000 150800 234000 296400 312000
Add: Desired ending inventory 150800 234000 296400 312000
Total needs 267800 384800 530400 608400
Less: Beginning inventory 150800 234000 296400
Purchases 234000 296400 312000
Paid in July (50% x $296400);(50% x $312000) 148200 156000
Add a comment
Know the answer?
Add Answer to:
Cash Budget The controller of Feinberg Company is gathering data to prepare the cash budget for...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 1 Cash Budget The owner of a building supply company has requested a cash budget for...

    1 Cash Budget The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $886. b. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 C. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month,...

  • Cash Budget The owner of a building supply company has requested a cash budget for June....

    Cash Budget The owner of a building supply company has requested a cash budget for June. After examining the records of the company, you find the following: a. Cash balance on June 1 is $1,086. b. Actual sales for April and May are as follows: April May Cash sales $10,000 $18,000 Credit sales 28,900 35,000 Total sales $38,900 $53,000 C. Credit sales are collected over a 3-month period: 40% in the month of sale, 30% in the second month, and...

  • The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the...

    The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $107,000 $135,000 $181,000 Manufacturing costs 45,000 58,000 65,000 Selling and administrative expenses 31,000 36,000 40,000 Capital expenditures _ _ 43,000 The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and...

  • 1: Prepare a sales budget, including a schedule of expected cash collections. 2: prepare a merchandise...

    1: Prepare a sales budget, including a schedule of expected cash collections. 2: prepare a merchandise purchase budget, including a schedule of expected cash disbursements for merchandise, and a selling and administrative budget. 3: prepare a cash budget. MOST LIKELY NUMBERS AND ASSUMPTIONS SALES MANAGER PRIVATE INFORMATION October Most likely sales 600,000 910,000 475,000 385,000 PURCHASING MANAGER PRIVATE INFORMATION Most likely cost of merchandise as a % of sales Desired ending inventory as a percentage of next month's cost of...

  • You have been asked to prepare a December cash budget for Ashton Company, a distributor of...

    You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operations: a. The cash balance on December 1 will be $39,000. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October $ 65,000 397,000 November $ 65,000 522,000 December $ 82,600 598,000 Sales on account are collected over a three-month period in the...

  • Cash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget...

    Cash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $86,000 $90,000 $95,000 Manufacturing costs 34,000 39,000 44,000 Selling and administrative expenses 15,000 16,000 22,000 Capital expenditures _ _ 80,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the...

  • Cash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget...

    Cash Budget The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: May June July Sales $112,000 $138,000 $186,000 Manufacturing costs 47,000 59,000 67,000 Selling and administrative expenses 32,000 37,000 41,000 Capital expenditures _ _ 45,000 The company expects to sell about 15% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the...

  • Cash Budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget...

    Cash Budget The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: June July August Sales $160,000 $185,000 $200,000 Manufacturing costs 66,000 82,000 105,000 Selling and administrative expenses 40,000 46,000 51,000 Capital expenditures 120,000 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and...

  • Cash Budget The controller of Sonoma Housewares Inc. Instructs you to prepare a monthly cash budget for the...

    Cash Budget The controller of Sonoma Housewares Inc. Instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget Information: May June July Sales Manufacturing costs $86,000 34,000 15,000 $90,000 39,000 16,000 $95,000 44,000 22,000 Selling and administrative expenses Capital expenditures - 80,000 The company expects to sell about 10% of its merchandise for cash of sales on account, 70% are expected to be collected in the month following the sale...

  • You have been asked to prepare a December cash budget for Ashton Company, a distributor of...

    You have been asked to prepare a December cash budget for Ashton Company, a distributor of exercise equipment. The following information is available about the company's operations: a. The cash balance on December 1 is $41,000. b. Actual sales for October and November and expected sales for December are as follows: Cash sales Sales on account October November December $ 68,400 $ 87,400 $ 95, 800 $ 415,000 $ 614,000 $ 692,000 Sales on account are collected over a three-month...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT