Refer to P22-23A. You have gathered information to complete the cash budget for Go Cycles. Budgeted cash

Question:

Refer to P22-23A. You have gathered information to complete the cash budget for Go Cycles.

Budgeted cash collections information: Sales are 50\% cash and $50 \%$ credit. (Use sales on the last two lines of P22-23A, Req. 2.) Credit sales are collected in the month after the sale.

Budgeted cash payments for purchases information: Inventory purchases are paid $60 \%$ in the month of purchase and $40 \%$ the following month.

Cash payments for operating expenses information: All cash expenses are paid in the month incurred.

The July 31, 2008 balance sheet showed a cash balance of $\$ 22,000$ and an accounts payable balance of $\$ 52,000$.

Requirements

1. Prepare schedules of budgeted cash collections from customers and budgeted cash payments for purchases. Show amounts for each month and totals for August and September. Round your computations to the nearest dollar.

2. Prepare a cash budget similar to Exhibit 22-13.

Exercise P22-23A

Representatives of the various departments of Go Cycles have assembled the following data. As the business manager, you must prepare the budgeted income statements for August and September 2008.

Sales budget information: Sales in July were $\$ 196,000$. You forecast that monthly sales will increase $3 \%$ in August and $2 \%$ in September.

Inventory, purchases, and cost of goods sold budget information: Go Cycles tries to maintain inventory of $\$ 50,000$ plus $20 \%$ of the sales revenue budgeted for the following month. Monthly purchases average $60 \%$ of sales revenue in that same month. Actual inventory on July 31 is $\$ 90,000$. Sales budgeted for October are $\$ 220,000$.

Operating expense budget information:

a. Monthly salaries amount to $\$ 15,000$. Sales commissions equal $6 \%$ of sales for that month. Combine salaries and commissions into a single figure.

b. Other monthly expenses are

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