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Cash Budget The controller of Stanley Yelnats Inc. asks you to prepare a monthly cash budget for the next three months. You are presented with

Cash Budget
The controller of Stanley Yelnats Inc. asks you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
Line Item Description January February March
Sales $142,000 $170,000 $234,000
Manufacturing costs 60,00073,00084,000
Selling and administrative expenses 41,00046,00051,000
Capital expenditures __56,000
The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in full in the month following the sale and the remainder in the following month. Depreciation, insurance, and property tax expense represent $6,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in June, and the annual property taxes are paid in October. Of the remainder of the manufacturing costs, 85% are expected to be paid in the month in which they are incurred and the balance in the following month. All selling and administrative expenses are paid in the month incurred.
Current assets as of January 1 include cash of $54,000, marketable securities of $77,000, and accounts receivable of $158,200($124,000 from December sales and $34,200 from November sales). Sales on account in November and December were $114,000 and $124,000, respectively. Current liabilities as of January 1 include a $71,000,12%,90-day note payable due March 20 and $6,000 of accounts payable incurred in December for manufacturing costs. It is expected that $4,300 in dividends will be received in January. An estimated income tax payment of $20,000 will be made in February. Stanley Yelnat's regular quarterly dividend of $6,000 is expected to be declared in February and paid in March. Management desires to maintain a minimum cash balance of $42,000.
Required:
Question Content Area
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.
Stanley Yelnats Inc.
Cash Budget
For the Three Months Ending March 31
Line Item Description January February March
Estimated cash receipts from:
Cash sales $Cash sales
14,200
$Cash sales
17,000
$Cash sales
23,400
Collections of accounts receivable Collections of accounts receivable
121,000
Collections of accounts receivable
126,660
Collections of accounts receivable
145,440
Dividends Dividends
4,300
Dividends
0
Dividends
0
Total cash receipts $Total cash receipts
139,500
$Total cash receipts
143,660
$Total cash receipts
168,840
Estimated cash payments for:
Manufacturing costs $Manufacturing costs
51,900
$Manufacturing costs
65,050
$Manufacturing costs
76,350
Selling and administrative expenses Selling and administrative expenses
41,000
Selling and administrative expenses
46,000
Selling and administrative expenses
51,000
Capital expenditures Capital expenditures
0
Capital expenditures
0
Capital expenditures
56,000
Other purposes:
Note payable (including interest) Note payable (including interest)
0
Note payable (including interest)
0
Note payable (including interest)
73,130
Income taxes Income taxes
0
Income taxes
20,000
Income taxes
0
Dividends Dividends
0
Dividends
0
Dividends
6,000
Total cash payments $Total cash payments
92,900
$Total cash payments
131,050
$Total cash payments
262,480
Cash increase (decrease) $Cash increase (decrease)
46,600
$Cash increase (decrease)
0
$Cash increase (decrease)
19,570
Cash balance at beginning of month Cash balance at beginning of month
54,000
Cash balance at beginning of month
113,210
Cash balance at beginning of month
0
Cash balance at end of month $Cash balance at end of month
100,600
$Cash balance at end of month
113,210
$Cash balance at end of month
19,570
Minimum cash balance Minimum cash balance
42,000
Minimum cash balance
42,000
Minimum cash balance
42,000
Excess (deficiency) $Excess (deficiency)
58,600
$Excess (deficiency)
71,210
Excess (deficiency)
-22,430

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