Question

Budgeting Cash Flow
The following various elements relate to Whitfield, Inc.'s cash budget for April of the current year. For each item, determine the amount of cash that Whitfield should receive or pay in April.

a. At $30 each, unit sales are 5,000 and 6,000 for March and April, respectively. Total sales are typically 40% for cash and 60% on credit; 30% of credit sales are collected in the month of sale, with the balance collected in the following month. Uncollectible accounts are negligible.

March sales	$Answer
April cash sales	Answer
April credit sales	Answer
Cash collected in April	$Answer

b. Merchandise purchases were $47,000 and $80,000 for March and April, respectively. Typically, 20% of total purchases are paid for in the month of purchase with a 5% cash discount. The balance of purchases is paid for (without discount) in the following month.

March purchases	$Answer
April purchases	Answer
Cash paid in April	$Answer

c. Fixed administrative expenses, which total $13,000 per month, are paid in the month incurred. Variable administrative expenses amount to 20% of total monthly sales revenue, one-half of which is paid in the month incurred, with the balance paid in the following month.

April fixed expenses	$Answer
March variable expenses	Answer
April variable expenses	Answer
Cash paid in April	$Answer

d. A store asset originally costing $10,000, on which $6,000 depreciation has been taken, is sold for cash at a loss of $400.

$Answer

Answer 1

a) Cash collection in april :

March credit sales (5000*30*60%*70%)	63000
April cash sales (6000*30*40%)	72000
April credit sales (6000*30*60%*30%)	32400
Cash collected in April	167400

b) Calculate cash payment in april :

March purchases (47000*80%)	37600
April purchase (80000*20%*95%)	15200
Cash paid in april	52800

c) Expense paid :

April fixed expenses	13000
March variable expense (5000*30*20%*50%)	15000
April variable expense (6000*30*20%*50%)	18000
Cash paid in april	46000

d) Cash received on equipment sold = (10000-6000-400) = 3600