Calgon Products, a distributor of organic beverages, needs a cash budget for September. The following information is available a. The cash balance at the beginning of September is $9,550 b.Actual sales for July and August and expected sales for September are as shown below. Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 7096 collected in the month following sale, and 18% collected in the second month following sale. The remaining 2% is uncollectible July August September Cash sales Sales on account $ 7,600 5,800 $ 7,840 41,000 25,500 51,000 Total sales $33,100 $46,800 $58,840 c. Purchases of inventory will total $30,500 for September. Twenty percent of a month's inventory d. Selling and administrative expenses are budgeted at $18,500 for September. Of this amount, $6,200 is e. Equipment costing $23,500 will be purchased for cash during September, and dividends totalling $4,680 f. The company maintains a minimum cash balance of $5,000. An open line of credit is available from the purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total $22,600, all of which will be paid in September. for depreciation. will be paid during the month. company's bank to bolster the cash position as needed. Assume any borrowings occur at the beginning of the month and repayments occur at the end of the month. Interest on outstanding loan balances during the month must be paid at the end of each month. The monthly interest rate is 0.5% Required 1. Prepare a schedule of expected cash collections for September Answer is complete and correct 7,840 September cash sales September collections on account: July sales August sales September sales 4.590 28,700 5,100 $ 46,230 Total cash collections 2. Prepare a schedule of expected cash disbursements during September for inventory purchases Answer is complete and correct. Payments to suppliers August pu rchases (accounts payable) September purchases Total cash payments 6,100 $ 28,700 3. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September. (Round your intermediate calculations to the nearest whole number.) Answer is complete but not entirely correct. Calgon Products Cash Budget For the Month of September Cash balance, September 1 Add cash receipts Collections from customers Total cash available before current financing Less disbursements Payments to suppliers for inventory Selling and administrative expenses Equipment purchases Dividends paid Total disbursements Excess (deficiency) of cash available over disbursements Financing Borrowings Repayments Interest Total financing Cash balance, September 30 9,550 46,230 55,780 28.700 2,300 23,500 4.680 69.180 (13,400) 18.400 0 0 18.400 5,000
