Question

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: September October November Sales $135,000 $167,000 $213,000 Manufacturing costs 57,000 72,000 77,000 Selling and administrative 47,000 50,000 $1,000 expenses Capital expenditures 51,000 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 and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $7,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. Of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of 551,000, marketable securities of $73,000, and accounts receivable of $150,400 ($118,000 from July sales and $32,400 from August sales). Sales on account for July and August were $108,000 and $118,000, respectively. Current liabilities as of September 1 include $7,000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $20,000 will be made in October. Bridgeport's regular quarterly dividend of $7,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000.

I tried to do it by myself and I could not get any other right answers besides the ones that are shown above. Thank you for the help in advance!

Answer 1

1. cash budget september October November Estimated cash receipts from: Cash sales 13,500.00 16,700.00 21,300.00 115,000.00 120,450.00 141,60.00 Collection of accounts receivable Total cash receipts Est imated cash pa yments for: 128,500.00 137,150.00 162,960.00 Manufacturing costs Selling and admin istr at ive expenses Capitalexpenditures 47,000.00 62,000.00 69,000.00 47,000.00 50,000.00 81,000.00 51,000.00 Other purposes Incometax 20,000.00 Dividends 7,000.00 94,000.00 132,000.00 208,000o.00 Total cash payments Cash increase or (decrease) 34,500.00 5,150.00 85,500.00 45,040.00 Cash balance at beginning of month 51,000.00 90,650.00 Cash balance at end of month 90,650.00 85,500.00 45,610.00 Minimum cash ba lance 50,000.00 50,000.00 50,000.00 Excess or (deficiency) 35,500.00 40,650.00 4,390.00

Wokring: september October November total sa les cash sales (10% of total sales) credit sales (90% of total sa les) 167000 213000 135000 13500 21300 16700 121500 150300 191700 september October collection from credit sa les November total July sales 30% of 32400 32400 108000 August sales 70% of 82600 118000 82600 35400 30% of 118000 35400 september sa les 70% of 121500 85050 85050 30% of 121500 36450 36450 october sales 70% of 105210 105210 150300 total 141660 377110 115000 120450 september October November total Manufacturing costs Less : dep, insurance, property tax balance 77000 206000 57000 72000 7000 7000 7000 21000 70000 185000 50000 65000 payment for manu facturing cost August payment september payment september October November total 7000 7000 80% of 20% of 50000 40000 40000 50000 10000 10000 October payment 80% of 20% of 65000 52000 52000 65000 13000 13000 November pa yment 80% of 70000 56000 56000 total 62000 69000 178000 47000