Cash Budget

You are an accountant at Hostell Homewares Inc. The controller wants you to prepare a monthly cash budget for the next three months, based on the following budget information.

				September		October		November
Sales				$300,000		$350,000		$325,000
Manufacturing costs				$175,000		$200,000		$210,000
Selling and administrative expenses				$50,000		$50,000		$55,000
Capital expenditures								$200,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 65% are expected to be collected in the month following the sale and the remainder the following month (second month following the sale). Depreciation, insurance and property tax expense represent $50,000 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, 75% are expected to be paid in the month in which they are incurred and the balance in the following month.

Additionally, the following account balances as of September 1.

Current Assets
	Cash							$50,000
	Marketable securities							$75,000
	Accounts receivable							$327,000
		*July portion of A/R		$77,000
		*August portion of A/R		$250,000
Current Liabilities
	Accounts Payable							$50,000

Other items of note.

Sales on account for.
	July						$220,000
	August						$250,000
Selling and administrative costs are paid in the period incurred.
Estimated income tax payment to be made in October							$60,000
Regular quarterly dividend declared in October							$30,000
Regular quarterly dividend paid in November							$30,000

Lastly, Scott's management desires a minimum monthly cash balance of $50,000.

Instructions: Using formulas/functions wherever available, complete the following on the Input tab

1. Prepare a monthly cash budget and supporting schedules for September, October, and November.
2. On the basis of the cash budget prepared in Part 1, what feedback would you give the controller?

Using formulas/functions wherever possible, complete the following... November Scott Housewares Inc. Cash Budget For the Three Months Ending November 30 September October Estimated cash receipts from: Cash sales Collections from accounts receivable Total cash receipts Estimated cash payments for: Manufacturing co costs Selling and administrative expenses Capital expenditures Other purposes: Income tax Dividends Total cash payments Cash increase (decrease) Cash balance at beginning of month Cash balance at end of month Minimum cash balance Excess deficiency) Supporting calculations: Collections of accounts receivable: Sales on Account Percentage September October November July sales August sales: Collected in September Collected in October September sales: Collected in October Collected in November October sales: Collected in November Totals Payments for manufacturing costs: Costs on Account Percentage Payments Paid in September: Incurred in August Incurred in September Total Paid in October: Incurred in September Incurred in October Total Paid in November Incurred in October Incurred in November Total