Question

Required information [The following information applies to the questions displayed below.) Built-Tight is preparing its master budget for the quarter ended September 30, 2017. Budgeted sales and cash payments for product costs for the quarter follow: July August $56,000 $72,000 September $ 56,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Factory overhead 15,560 3,440 19,600 12,840 2,760 16,200 13,160 2,840 16,600 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash: $44,400 in accounts receivable; and a $4,400 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3.400 per month), and rent ($5,900 per month).

Answer 1

Calculation of cash receipts

Particulars	July	August	September
Cash sales	$11200	$14400	$11200
Receipt from debtors'	$44400	$44800	$57600
Total budgeted cash receipt	$55600	$59200	$68800

BUILT-TIGHT

Cash Budget

For July, August and September

July August September Beginning Cash balance $15000 $15000 $23573 Cash Receipt $55600 $59200 $68800 Total cash available $70600 $74200 $92373 Cash Payment for Direct material $15560 $12840 $13160 Direct Labor $3400 $2760 $2840 Factory Overhead $19600 $16200 $16600 Sales Commission $5600 $7200 $5600 Office Salary $3400 $3400 $3400 Rent $5900 $5900 $5900 Interest $44 $23 $0 Total Cash payment $53504 $48323 $47500 Preliminary cash balance $17096 $25877 44873 Additional Loan ( loan repayment) ($2096) ($2304) $0 Ending Cash balance $15000 $23573 $44873

Loan Balances

	July	August	September
Loan balance - Beginning of month	$4400	$2304	$0
Additional Loan ( loan repayment)	($2096)	($2304)	$0
Loan balance - End of month	$2304	$0	$0