Cash Budget

The Williams Supply Company sells for $40 one product that it purchases for $25. Budgeted sales in total dollars for next year are $1,400,000. The sales information needed for preparing the July budget follows:

MonthSales RevenueMay$ 34,000June48,000July56,000August64,000

Account balances at July 1 include these:

Cash$ 24,000Merchandise inventory17,500Accounts receivable (sales)25,760Accounts payable (purchases)16,250

The company pays for one-half of its purchases in the month of purchase and the remainder in the following month. End-of-month inventory must be 50 percent of the budgeted sales in units for the next month. A 2 percent cash discount on sales is allowed if payment is made during the month of sale. Experience indicates that 50 percent of the billings will be collected during the month of sale, 40 percent in the following month, 8 percent in the second following month, and 2 percent will be uncollectible. Total budgeted selling and administrative expenses (excluding bad debts) for the fiscal year are estimated at $210,000 , of which one-half is fixed expense (inclusive of a $21,000 annual depreciation charge). Fixed expenses are incurred evenly during the year. The other selling and administrative expenses vary with sales. Expenses are paid during the month incurred. (Round your answers to the nearest whole number.)

(a) make a schedule of estimated cash collections for July.

WilliamsSupply Company

Schedule of Cash Collections

For the Month of JulyCurrent month's salesAnswer

Previous month's salesAnswer

Two months' prior salesAnswer

Total cash collectionsAnswer

(b) make a schedule of estimated July cash payments for purchases. For this, perform your calculation using units rounding up to the nearest whole unit. Then convert to dollars for your answer.

WilliamsSupply Company

Schedule of Cash Payments for Purchases

For the Month of JulyCurrent month's purchasesAnswer

Beginning accounts payableAnswer

Total cash paymentsAnswer

(c) make a schedules of July selling and administrative expenses, separately identifying those requiring cash disbursements.

WilliamsSupply Company

Schedule of Selling and Administrative Expenses and Cash Disbursements

For the Month of JulyTotalCashSelling and administrative expenses:FixedAnswer

Cash paymentAnswer

VariableAnswer

Answer

Total expenses and cash disbursementsAnswer

Answer

(d) malke a cash budget in summary form for July.

Do not use negative signswith any answers below.

WilliamsSupply Company

Cash Budget

For the Month of JulyCash receiptsAnswer

Cash disbursements:MerchandiseAnswer

Selling and administrativeAnswer

Answer

Excess receipts (disbursements)Answer