Question

Check my 2 Problem 8-24 Cash Budget with Supporting Schedules [LO8-2, LO8-4, LO8-8] Garden Sales, Inc., sells garden supplies. Management is planning its cash needs for the second quarter. The company usually has to borrow money during this quarter to support peak sales of lawn care equipment, which occur during May. The following information has been assembled to assist. 100 points preparing a cash budget for the quarter: a. Budgeted monthly absorption costing income statements for April-July are: еВok April $ 740,000 Мay $920,000 620,000 $ 530,000 June July Sales sold margin 159.000 Print 222.000 276.000 186.000 Gross Selling and administrative expenses: Selling expense 53,000 92,000 111,000 73,000 103,000 Tatal sel1ing and administrative expenses 118,200 009 08T 79,000 $ 95,400 67 ,800 56,000 143,000 References Net operating income Includes $34,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the first month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled $290,000, and March's sales totaled $305,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% of a month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. AcCounts payable at March 31 for inventory purchases during March total $137,200.

Answer 1

April | 148,000 May 184,000 June 124,000 Quarter 456,000 1.Schedule of Expected Cash Collections (working Note a) Cash sales Sales on account: February 20% of 232,000 46,400 46,400 March 170,800 70% of 20% of 244,000 244,000 170,800 48,800 48,800 April 59,200 59,200 10% of 70% of 20% of 592,000 592,000 592,000 414,400 414,400 118,400 118,400 May 73,600 10% of 70% of 736,000 736,000 73,600 515,200 515,200 June 10% of 496,000 49,600 807,200 49,600 1,952,400 Total cash collections 424,400 720,800 Working Note: a) sales details Total Sales cash (20%) credit (80%) Feb 290,000 58,000 232,000 March 305,000 61,000 244,000 April 740,000 148,000 592,000 May 920,000 184,000 736,000 June 620,000 124,000 496,000 2a. Merchandise Purchases Budget Budgeted cost of goods sold Add: Desired ending merchandise inventory (20% of next month COGS) Total needs Less: Beginning merchandise inventory Required Inventory purchases April 518,000 128,800 646,800 103,600 543,200 May 644,000 86,800 730,800 128,800 602,000 June Total 434,000 1,596,000 74,200 74,200 508,200 1,670,200 86,800 103,600 421,400 1,566,600 May June April 137,200 271,600 2b. Schedule of Expected Cash Disbursements for Merchandise Purchases Beginning accounts payable April purchases May purchases June purchases Total cash disbursements 271,600 301,000 Quarter 137,200 543,200 602,000 210,700 1,493,100 301,000 210,700 511,700 408,800 572,600

April May 63,000 40,600 424,400 | 720,800 487,400 761,400 June 40,200 807,200 847,400 Quarter 63,000 1,952,400 2,015,400 511,700 73,000 11,200 Garden Sales, Inc. 3.Cash Budget For the Quarter Ended June 30 Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Purchases for inventory Selling expenses Administrative expenses (excl depreciation of $34000) Land purchases Dividends paid Total cash disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest (112000*3%+47000*2%) Total financing Ending cash balance 408,800 572,600 92,000 111,000 17,000 35,600 49,000 41,000 558,800 768,200 - 71,400 - 6,800 1,493,100 276,000 63,800 49,000 41,000 595,900 251,500 | 92,500 112,000 47,000 - 159,000 -|- 159,000 - 159,000 - - 4,300 - 4,300 47,000 - 163,300 - 4,300 40,200 88,200 88,200 112,000 40,600