Question
Budgeted sales and cash payments for product costs for the quarter follow: JulyAugustSeptemberBudgeted sales$61,500$77,500$50,500Budgeted cash payments for Direct materials16,66013,94014,260Direct labor4,5403,8603,940Factory overhead20,70017,30017,700 Sales are 25% cash
Budgeted sales and cash payments for product costs for the quarter follow:
JulyAugustSeptemberBudgeted sales$61,500$77,500$50,500Budgeted cash payments for
Direct materials16,66013,94014,260Direct labor4,5403,8603,940Factory overhead20,70017,30017,700
Sales are 25% cash and 75% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash; $45,500 in accounts receivable; $5,000 in accounts payable; and a $5,500 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($4,500 per month), and rent ($7,000 per month).
Problem 7-2A Part 1
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