Question 4: A more involved cash flow budget Goats-R-Us, Inc. has budgeted sales revenues as follows:...

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Question 4: A more involved cash flow budget Goats-R-Us, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June July August $135,000 $125,000 $ 90,000 90,000 255,000 195,000 $225.000 $380,000 $285,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: June July August $300,000 240,000 105,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash. The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month. Instructions 1. Prepare a Schedule of Expected Collections from Customers (1.5%) 2. Prepare a Schedule of Expected Payments for Purchases of Inventory (1.5%) 3. Prepare a cash budget for the months of July and August (4%) Question 4: A more involved cash flow budget Goats-R-Us, Inc. has budgeted sales revenues as follows: Credit sales Cash sales Total sales June July August $135,000 $125,000 $ 90,000 90,000 255,000 195,000 $225.000 $380,000 $285,000 Past experience indicates that 60% of the credit sales will be collected in the month of sale and the remaining 40% will be collected in the following month. Purchases of inventory are all on account with 50% paid in the month of purchase and 50% paid in the month following purchase. Budgeted inventory purchases are as follows: June July August $300,000 240,000 105,000 Other cash disbursements budgeted: (a) selling and administrative expenses of $48,000 each month, (b) dividends of $103,000 will be paid in July, and (c) purchase of equipment in August for $30,000 cash. The company's policy is to maintain a minimum cash balance of $50,000 at the end of each month. The company borrows money from the bank at 6% interest if necessary to maintain the minimum cash balance. Borrowed money is repaid in months when there is an excess cash balance. The beginning cash balance on July 1 was $50,000. Assume that borrowed money in this case is for one month. Instructions 1. Prepare a Schedule of Expected Collections from Customers (1.5%) 2. Prepare a Schedule of Expected Payments for Purchases of Inventory (1.5%) 3. Prepare a cash budget for the months of July and August (4%)

Answer rating: 100% (QA)

1 Schedule of Expected Collections from Customers June Credit Sales 135000 60 81000 July Credit Sale... View the full answer