Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cash Budget The Williams Supply Company sells for $50 one product that it purchases for $20. Budgeted sales in total dollars for the year

image text in transcribedimage text in transcribed

Cash Budget The Williams Supply Company sells for $50 one product that it purchases for $20. Budgeted sales in total dollars for the year are $3,000,000. The sales information needed for preparing the July budget follows: Month Sales Revenue May $ 175,000 240,000 June July 295,000 August 320,000 Account balances at July 1 include these: Cash $125,000 Merchandise inventory 47,200 Accounts receivable (sales) Accounts payable (purchases) 84,530 47,200 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 40% of the budgeted sales in units for the next month. A 2% cash discount on sales is allowed if payment is made during the month of sale. Experience indicates that 60% of the billings will be collected during the month of sale, 25% in the following month, 12% in the second following month, and 3% will be uncollectible. Total budgeted selling and administrative expenses (excluding bad debts) for the fiscal year are estimated at $1,200,000, of which three-fourths is fixed expense (inclusive of a $36,000 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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Core Concepts of Government and Not For Profit Accounting

Authors: Michael H. Granof, Penelope S. Wardlow

2nd edition

471737925, 978-0-470-4605, 978-0471737926

More Books

Students also viewed these Accounting questions