Question
Answering the questions in the second page.i want all detail, how to get the numbers. Cruises, Inc. has budgeted sales revenues as follows: June July
Answering the questions in the second page.i want all detail, how to get the numbers.
Cruises, Inc. has budgeted sales revenues as follows:
June July August
Credit sales $135,000 $125,000 $ 90,000
Cash sales 90,000 255,000 195,000
Total sales $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 credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are:
June $300,000
July 240,000
August 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 wishes 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
Prepare a cash budget for the months of July and August. Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory.
CRUISES, INC.
Cash Budget
For the Two Months of July and August
| July | August |
Beginning cash balance |
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Add: Receipts |
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Collections from customers |
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Cash sales |
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Total receipts |
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Total available cash |
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Less: Disbursements |
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Purchases |
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Selling and administrative expenses |
|
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Dividends |
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Equipment purchase |
|
|
Total disbursements |
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Excess (deficiency) of available cash over disbursements |
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Financing |
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Borrowings |
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Repayments |
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Ending cash balance |
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Name: ID: Cruises, Inc. has budgeted sales revenues as follows: June $135,000 90,000 $225,000 Credit sales Cash sales Total sales July $125,000 255,000 $380,000 August $ 90,000 195,000 $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 credit and 50% is paid in the month of purchase and 50% in the month following purchase. Budgeted inventory purchases are: 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 wishes 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 Prepare a cash budget for the months of July and August. Prepare separate schedules for expected collections from customers and expected payments for purchases of inventory. Please follow the format in the next page for answering this question CRUISES, INC. Cash Budget For the Two Months of July and August July Beginning cash balance Add: Receipts Collections from customers Cash sales Total receipts Total available cash Less: Disbursements Purchases Selling and administrative expenses Dividends Equipment purchase Total disbursements Excess (deficiency) of available cash over disbursements Financing Borrowings Repayments Ending cash balance August
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