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 $250,000 $300,000 $315,000 Sales 150,000 185,000 180,000 Manufacturing costs Selling and administrative 51,000 42,000 48,000 expenses 200,000 Capital expenditures 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 &id the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $50,000 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 $40,000, marketable securities of $75,000, and accounts receivable of $300,000 ($60,000 from July sales and $240,000 from August sales). Sales on account for July and August were $200,000 and $240,000, respectively. Current liabilities as of September 1 include $40,000 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 $55,000 will be made in October Bridgeport's regular quarterly dividend of $25,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $50,000. Required: quired: Prepare a monthly cash budget and supporting schedules for September, October, and November. Enter all amounts as positive values cept for overall cash decrease and deficiency which should be indicated with a minus sign. Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 October November September Estimated cash receipts from: Cash sales 30,000 25,000 31,500 Collection of accounts receivable 385,500 X 328,500 X 279,450 X 310,950 X 358,500 X 410,500 X Total cash receipts Less estimated cash payments for: Manufacturing costs Selling and adminstrative expenses Capital expenditur dropdown 134,000 120,000 124,000 51,000 42,000 48,000 200,000 Other purposes: Income tax 55,000 25,000 Dividends 410,000 227,000 162,000 Total cash payments -99,050 X 131,500 X $ $ 248,500 X Cash Increase or (decrease) Y 320 000 238 500 40 000 Plus cash balance at beainnina of month Manufacturing costs 120,000 $ 124,000 134,000 Selling and administrative expenses 42,000 48,000 51,000 Capital expenditures 200,000 Other purposes: Income tax 55,000 Dividends 25,000 162,000 227,000 410,000 Total cash payments Cash increase or (decrease) 248,500 X 131,500 X $ -99,050 X Plus cash balance at beginning of month 238,500 X 320,000 X 40,000 288,500 X 370,000 X $ 220,950 X Cash balance at end of month Less minimum cash balance 50,000 50,000 50,000 170,950 X 320,000 X 238,500 X Excess or (deficiency)
