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 $132,000 $156,000 $209,000 Manufacturing costs 55,000 67,000 75,000 Selling and administrative 46,000 47,000 79,000 expenses Capital expenditures 50,000 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 inclde cash of $50,000, marketable securities of $71,000, and accounts receivable of $147,800 ($31,800 from July sales and $116,000 from August sales). Sales on account for July and August were $106,000 and $116,000, 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 $19,000 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 $49,000. Required: Required: 1. Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume 360 days per year for interest calculations. Bridgeport Housewares Inc. Cash Budget For the Three Months Ending November 30 September October November Estimated cash receipts from: Cash sales 13,200 15,600 20,900 Collection of accounts receivable 147,800 X Total cash receipts Less estimated cash payments for: Manufacturing costs Selling and administrative expenses Capital expenditures Other purposes: Income tax Dividends DOD Total cash payments Cash increase or decrease) October November 15,600 s 20,900 For the Three Months Ending November 30 September Estimated cash receipts from: Cash sales 13,200 Collection of accounts receivable 147,800 X Total cash receipts Less estimated cash payments for: Manufacturing costs Selling and administrative expenses Capital expenditures Other purposes: Income tax Dividends (Il lui) Total cash payments Cash increase or (decrease) Plus cash balance at beginning of month Cash balance at end of month Less minimum cash balance Excess or (deficiency)
