Question

Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash payments for the month and the cash balance expected on July 31.

1. Beginning cash balance on July 1: $50,000.
2. Cash receipts from sales: 30% is collected in the month of sale, 50% in the next month, and 20% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,720,000; June (actual), $1,200,000; and July (budgeted), $1,400,000.
3. Payments on merchandise purchases: 60% in the month of purchase and 40% in the month following purchase. Purchases amounts are: June (actual), $700,000; and July (budgeted), $750,000.
4. Budgeted cash payments for salaries in July: $275,000.
5. Budgeted depreciation expense for July: $36,000.
6. Other cash expenses budgeted for July: $200,000.
7. Accrued income taxes due in July: $80,000.
8. Bank loan interest paid in July: $6,600.

• Calculation
• Cash Budget

Calculate the budgeted cash receipts and cash payments.

Calculation of Cash Receipts from Sales ------------------Collected in------------------- July 31 Total Sales May June July Accounts Rec. Credit sales from: May $1,720,000 June 1,200,000 July 1,400,000 Totals $4,320,000 $0 $0 $0 $0 Calculation of Cash Payments for Merchandise ------------------Paid in------------------- July 31 Total Purchases June July Accounts Pay. Purchases from: June $700,000 July 750,000 Totals $1,450,000 $0 $0 $0 Cash Budget Prepare the July cash budget for Acco Co. ACCO CO. Cash Budget For the Month Ended July 31 Total cash available Cash payments for: Total cash payments $0

Answer 1

Solutions:

Computation of Cash receipts from sales Collected in Total sales June Jul-31 Accounts Rec. May July $516,000 Credits sales from May June July $1,720,000 $1,200,000 $1,400,000 $860,000 $360,000 $344,000 $600,000 $420,000 $240,000 $980,000 12 Totals $4,320,000 $516,000 $1,220,000 $1,364,000 $1,220,000 13 Computation of Cash Payments from merchandise Paid in Total Purchases June July 16 Jul-31 Accounts Pay. 17 18 19 20 21 Purchases from: June July $420,000 $700,000 $750,000 $280,000 $450,000 $300,000 Totals $1,450,000 $420,000 $730,000 $300,000 22 23 24 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 47 48 49 50 51 Sheet434 (2) Sheet717 Sheet390 (2) Sheet157 (19) Sheet

$50,000 $1,364,000 $1,414,000 Acco Company Cash Budget For the month ended July 31 Beginning cash balance Cash receipts from sales Total Cash available Cash disbursements: Payment for merchandise Other expenses Interest on Bank Loan Accrued Taxes Salaries Total Cash disbursements 11 $ 730,000 $200,000 $6,600 $80,000 $275,000 $1,291,600 Ending cash balance $122,400 19 20 23 24 25 26 29 30 31 32 33 34 35 36 37 38 20 Sheet434 (2) Sheet717 Sheet390 (2) Sheet157 (19) Sheet