Cash Budget

LeeAnn Ortiz owns a retail store that sells new and used sporting equipment. LeeAnn has requested a cash budget for October. After examining the records of the company, you find the following:

Cash balance on October 1 is $1,120.

Actual sales for August and September are as follows:

		August		September
Cash sales		$6,000		$4,500
Credit sales		59,000		62,000
Total sales		$65,000		$66,500

Credit sales are collected over a three-month period: 40 percent in the month of sale, 36 percent in the next month, and 22 percent in the second month after the sale. The remaining sales are uncollectible.

Inventory purchases average 70 percent of a month's total sales. Of those purchases, 45 percent are paid for in the month of purchase. The remaining 55 percent are paid for in the following month.

Salaries and wages total $3,850 per month.

Rent is $3,150 per month.

Taxes to be paid in October are $1,635.

LeeAnn usually withdraws $3,500 each month as her salary.

Advertising is $1,500 per month.

Other operating expenses total $3,800 per month.

Internet and telephone fees are $320 per month.

LeeAnn tells you that she expects cash sales of $5,000 and credit sales of $63,000 for October. She likes to have $3,000 on hand at the end of the month and is concerned about the potential October ending balance.

Required:

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Prepare a cash budget for October. Include supporting schedules for cash collections and cash payments. Round your intermediate computations and final answers to the nearest dollar.

Wooster Sporting Goods Store Cash Budget For the Month of October

Beginning cash balance	$fill in the blank f4e12007b063fc6_1
Collections:
Cash sales	fill in the blank f4e12007b063fc6_2
Credit sales:
October	fill in the blank f4e12007b063fc6_3
September	fill in the blank f4e12007b063fc6_4
August	fill in the blank f4e12007b063fc6_5
Total cash available		$fill in the blank f4e12007b063fc6_6
Disbursements:
Inventory purchases:
October	$fill in the blank f4e12007b063fc6_7
September	fill in the blank f4e12007b063fc6_8
Salaries and wages	fill in the blank f4e12007b063fc6_9
Rent	fill in the blank f4e12007b063fc6_10
Taxes	fill in the blank f4e12007b063fc6_11
Other operating expenses	fill in the blank f4e12007b063fc6_12
Owner withdrawal	fill in the blank f4e12007b063fc6_13
Advertising	fill in the blank f4e12007b063fc6_14
Internet and telephone	fill in the blank f4e12007b063fc6_15	fill in the blank f4e12007b063fc6_16
Ending cash balance		$fill in the blank f4e12007b063fc6_17

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The cash budget begins with the beginning cash balance. Add all cash receipts. Subtract all cash disbursements. Calculate the ending cash balance.

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Explain how each of the four data analytic typesdescriptive, diagnostic, predictive, or prescriptivecan be used in LeeAnn's budgeting process. (See Exhibits 2.5 and 2.6, for a review of data analytic types.)

The cash budget is used both

descriptively and predictivelydiagnosticly and predictivelypredictively and prescriptivelyprescriptively and descriptively

to describe what is expected given LeeAnn's assumptions.

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Incorrect

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