Calculston ME How Cash Budget The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information s September October November Sales $136,000 $170,000 $227.000 Manufacturing costs 57.000 23.000 82,000 Selling and administrative 51,000 48,000 86,00 expenses Capital expenditures 54,000 The company expects to sell about 10 % of its merchandise for cash. Of sales on account, 70 % are expected to be collected in the month following the sale and the remainder the followng month (second month following sale). Depreciation, insurance, and property tax expense represent $6.000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in January and the annual property taxes are paid in December. Of the remainder of the manufacturing costs. 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of September 1 include cash of s52.000, marketable securities of $73.000, and accounts receivable of $151,700 ($119.000 from July sales and $32,700 fram August sales). Sales on account for July and August were $109,000 and $119.000, respectively. Current liabilities as of September 1 include $6.000 of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incumed, An estimated income tax payment of $20.000 will be made in October, Bridgeport's regular quarterly dividend of s6.000 is expected to be declared in October and paid in November, Management desires to maintain a minimum cash balance of $51,000. Requireds 1. Prepare a monthly cash budget and supporting schedules for September, October, snd November Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign, Assume 360 days per vear for interest caiculations Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 September November October Estimated cash receipts from Cash sales 22.700 17.000 13600 Collection of accounts receivable Total cash recepts Less estimated cash payments for: Manufacturing costs Selling and administrative exxpenses Previous Total cash receipts Less estimated cash payments for Manufacturing costs Selling and administrative expenses Capital expenditures Other purposes Income tax Dividends Total cash payments Cash increase or (decrease) Plus cash balance at beginning of month Cash balance at end of month Less minimum cash balance Excess or (deficiency) Feeack TONMTon The primanry squrce of eslimeted oash regeiots is from aash seles and oollections on acoount To estimate cash receipts from cash sales and gollections on acoount, a schedule cf.collections trom sales is precared Learning Objective 5 2. On the basis of thee cash budaet prepared in part (1), what recommendation should be made to the controller" of the and/or by the be maintained in Navember, This situation can be corrected by the minimum desired balence, The budget indicates that the minimum cash balance marketeble securities, if they are held for such purnoses. At the end of September and October, the cash balance wl