=+10-34 KK Cash budget (Appendix 10-1) (continuation of 10-33)

Refer to the information in Problem 10-33.

Assume the following: Elite Pet Transport (EPT) does not make any sales on credit. EPT sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which EPT gets the cash right away less a 2% transaction fee.

Purchases of materials are on account. EPT pays for half the purchases in the period of the purchase and the other half in the following period. At the end of March, EPT owes suppliers $8400.

EPT plans to replace a machine in April at a net cash cost of $13800.

Labour, other manufacturing costs and non-manufacturing costs are paid in cash in the month incurred except, of course, depreciation, which is not a cash flow. For April, $22500 of the manufacturing cost and $12500 of the non-manufacturing cost is depreciation.

410 Chapter 10: Master budget and responsibility accounting M10_HORN3377_02_LT_C10.indd 410 2/09/13 3:46 PM EPT currently has a $2600 loan at an annual interest rate of 12%. The interest is paid at the end of each month. If EPT has more than $10000 cash at the end of April it will pay back the loan. EPT owes $5400 in income taxes that need to be remitted in April.

EPT has cash of $5200 on hand at the end of March.

Required Prepare a cash budget for April for Elite Pet Transport.