Sutter, Inc. is a wholesaler for its only product, deluxe wireless rechargeable electric shavers, which sell for

Question:

Sutter, Inc. is a wholesaler for its only product, deluxe wireless rechargeable electric shavers, which sell for $$70$ each and cost Sutter $$48$ each. On June 1, 2019, Sutter's management requested a cash budget for June. The following selected account balances at May 31, 2019, were gathered by the accounting department:

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Actual sales for April and May were 30,000 and 50,000 units, respectively. Projected unit sales for June and July are 40,000 and 20,000, respectively. Experience indicates that 50% of sales should be collected in the month of sale, 30% in the month following sale, and the balance in the second month following sale. Uncollectible accounts, returns, and allowances are negligible. Planned purchases should provide ending inventories equal to 30% of next month's unit sales volume. Approximately 60% of the purchases are paid for in the month of purchase and the balance in the following month. Monthly operating expenses are budgeted at $$9.60$ per unit sold plus a fixed amount of $$288,000$, including depreciation of $$112,000$. Except for depreciation, 70% of operating expenses are paid in the month incurred and the balance in the following month. Interest expense is included in operating expenses. Special anticipated June transactions include the following:

1. Declaration of a $$60,000$ cash dividend to be paid 2 weeks after the June 20 date of record.

2. Sale of all but $$40,000$ of the marketable securities held on May 31; a gain of $$18,000$ is anticipated.

3. Payment of $$50,000$ installment on the note payable.

4. Trade-in of an old company plane originally costing $$300,000$ and now having accumulated depreciation of $$200,000$ at a gain of $$160,000$ on a new plane costing $$2,000,000$. Sufficient cash will be paid at the time of trade-in so that only 50% of the total price will have to be financed.

5. Sutter's treasurer has a policy of maintaining a minimum month-end cash balance of $$40,000$ and has a standing arrangement with the bank to borrow any amount up to a limit of $$400,000$. Required Prepare a cash budget for Sutter, Inc., for June 2019.

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