Cash Budget. The controller of Shoa Mart Inc; asks yod to prepare a montlly cash budget for the next three mionths, You are presented with the following budget informatlon: the rale and the remainder the following month. Deplecition, insurance; and properry tax expense represaot s3,000 of the estimated atuathly imanufacturing costs. The annual insurance premium is paid in-fune and the arinual property taxes are paid in October. of the remainder of the inanufacturing costs, 75% are expected to be paid in the morith in which the are inciired and the halancein the following month. All sales and . - administrative expenses are paid in the montio lecuried, coment assets as of lancary 1 include cash of 549.000, marketable secyritiss if 159,000, and eccounts receivable of 5152.000(5112.009 fromi 1. Prepare a monthly cash budget and supporting schedules for January, February, and March. Enter an increase in the month's cash balance or an excess cash amount as a positive number. Enter a decrease in the month's cash balance or a cash deficiency as a negative number. Assume 360 days per year for interest calculations. Manufacturing costs Selling and administrative expenses 37,00041.000 47,000 Capital expenditures 51,000 other purposes: Note payable (including interest) Income tax Dividends Total cash payments cash increase (decrease) Cosh balance at beginning of month Eash balarice at end of month Tilinioun cash balance Eiress intafictency] Cash Budget The controller of Shoe Mart Inc, asks 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 12% of its merchandise for cash. Of sales on account, 60% are expected to be collected in full in the month following the sale and the remainder the following month. Depreciation, insurance, and property tax expense represent $8,000 of the estimater monthly manufacturing costs. The annual insurance pren Yium is paid in June, and the annual property taxes are paid in october. Of the remainder of the manufacturing costs, 75% are expected to be paid in the month in which they are incurred and the balance in the foliowing month. All sales and administrative expenses are paid in the month incurred. Current assets as of January 1 include cash of $49,000, marketable securities of $69,000, and accounts recelvable of $152,800 ( $112,000 fron December sales and $40,800 from November sales). Sales on account in November and December were $102,000 and $112,000, respectively. Current liabilities as of January 1 include a $64,000,12%,90-day note payable due March 20 and $8,000 of accounts payable incurred in December for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. It is expected that $3,800 in dividends will be recelved in January. An estimated income tax payment of $18,000 will be made in February. Shoe Mart's regular quarterly dividend of $8,000 is expected to be declared in February and paid in March. Management desires to maintain a minimum cash balance of $38,000, Required: 1. Prepare a monthiy cash budget and supporting schedules for January, February, and March. Enter an increase in the month's cash balance or an excess cash amount as a positive number. Enter a decrease in the month's cash balance or a cash deficiency as a negative number. Assume 360 days per year for interest calculations. 2. The budget indicates that the minimum cash balance will not be maintained in March. This is due primarily to which of the following causes? I. Capital expenditures II. Note repayment