cash budget has 18 entires
Joseph A. Knab distributes men's suits in the Southwest. The following information was gathered to prepare the budget for the third Quarter Suits are budguted to sell for an average price of $225. Unit sales are expected to be as follows: June 4.000 suits July 4,500 sults August 4,700 suits September 4.600 suits October 4.600 suits Sales are made for cash and on credit. The following collection pattern is used to estimate monthly cash collections: 41 X 35 20 4 Cash sales Credit sales-month of sale Credit sales-month after sale Uncollectible Total The company tries to maintain an inventory of 25% of the following month's sales. The company expects to have 1.125 suits on and on June 30. Knab pays an average of 5146 per suit. The company pays for 70% of its purchases in the month of purchase and the remaining 30% in the month after purchase. The following monthly selling and administrative expenses are platined for the quarter, though advertising will have a one- time $30,000 increase in August 100% Variable Cost/Unit Depreciation Fixed Overhead $9,000 40,000 Rent Advertising Salaries Bad debts 84.000 150,000 $9.00 . On September 30, the company plans to purchase 545,000 of new office equipment. However, no additional depreciation will be recorded in the third quarter. Knab wants to maintain a minimum cash balance of $20,000. An open line of credit at a local bank allows the company to borrow up to $100,000 per quarter in $1.000 increments. All borrowing is done at the beginning of the month, and all repayments are made at the end of a month in $1,000 increments. Accrued interest is paid only when principal is repaid. The interest rate is 12% per year. Accrued expenses from the second quarter will be paid in July. Knab's tax rate is 30% The June 30 balance sheet is budgeted as follows: . June 30 Cash $21,000 180,000 164.250 Accounts receivable Inventory Plant & equipment Accumulated depreciation Total assets 540,000 (135,000) $770,250 $175,000 Accounts payable Accrued expenses 75,000 Gommon stock 300.000 Salaries 150.000 39.00 . . On September the company plans to purchase $45.000 of new officement. However, no additional depreciation be recorded in the third quarter Krab wants to maintain a minimum balance of $20.000. An on line of credit atacatanewow the company to borrow up to $100,000 per quarter in $1.000 increments Al borrowing is done at the beginning of the month, and all reparments are made at the end of a month ins1.00 increments Actre interest is paid only when principais repold. These 12 per Accrued expemes from the second ter will begin to Knab's textes The June 30 balance sheet is budgeted as follows: . . June 30 Cash $21.000 Accounts receivable 100.000 14.250 ventory Plante ipment Accumulated depreciation 540CD 125.000 Totalt $770.250 $175.000 71000 Accounts payable Acerved Commons Retained Total liabilities and equities 300.000 220250 $220240 Sali budet haly August Septe 5 Sun Adentitetett July Amp Set Sanies San Que 5 SAND hly A Quarter Bach Bude July Aga) September 5 Endine nentory Inventory Purchases Budget August September Quarter October $ $ s Ending Inventory. Budet Cat July LA 5 July A Cashoude August MA MY Auch September Tuta Ceci est Total Casheets Acco Rocotrable September Bladet $ Cash Pamento de Tot Cash Payment Accounts Pevalle At September Cash Budget July August Sept > July Quarter August September
