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:

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 following 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 $37,000, marketable securities of $53,000, and accounts receivable of $109,400 ($86,000 from July sales and $23,400 from August sales). Sales on account for July and August were $78,000 and $86,000, 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 incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeports regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $36,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for September, October, and 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 year for interest calculations.

	September		October		November
Sales	$98,000		$116,000		$164,000
Manufacturing costs	41,000		50,000		59,000
Selling and administrative expenses	34,000		35,000		62,000
Capital expenditures	_		_		39,000

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: September October November Sales $98,000 $116,000 $164,000 41,000 50,000 59,000 Manufacturing costs Selling and administrative expenses 34,000 35,000 62,000 Capital expenditures 39,000 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 following 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 $37,000, marketable securities of $53,000, and accounts receivable of $109,400 ($86,000 from July sales and $23,400 from August sales). Sales on account for July and August were $78,000 and $86,000, 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 incurred. An estimated income tax payment of $14,000 will be made in October. Bridgeport's regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $36,000. Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and 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 year for interest calculations. Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 November Cash Budget For the Three Months Ending November 30 September October Estimated cash receipts from: Cash sales 9,800 11,600 Collection of accounts receivable 83,600 16,400 93,400 Total cash receipts Less estimated cash payments for: Manufacturing costs 34,000 42,200 51,200 Selling and administrative expenses 34,000 35,000 62,000 39,000 Capital expenditures Other purposes: Income tax Dividends 14,000 6,000 68,000 91,200 158,200 Total cash payments Cash increase or (decrease) 25,400 $ X $ 37,000 62,400 Plus cash balance at beginning of month Cash balance at end of month Less minimum cash balance 62,400 $ X $ 36,000 36,000 36,000 Excess or (deficiency) 26,400