Exercise 07-32A Merchandising: Cash budget LO P4

Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow.

Budgeted	July					August					September
Sales		$	63,000				$	81,000				$	49,000
Cash payments for merchandise			42,400					32,600					33,400

Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $13,300 in cash; $48,600 in accounts receivable; $5,500 in accounts payable; and a $3,000 balance in loans payable. A minimum cash balance of $13,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($5,000 per month), and rent ($7,500 per month). (1) Prepare a cash receipts budget for July, August, and September. (2) Prepare a cash budget for each of the months of July, August, and September.

Homework Chapter 7 Saved Help Save Exit Submit Check my work 1 Exercise 07-32A Merchandising: Cash budget LO P4 5 points Kelsey is preparing its master budget for the quarter ended September 30. Budgeted sales and cash payments for merchandise for the next three months follow. eBook Budgeted Sales Cash payments for merchandise July $63,000 42,400 August $81,000 32,600 September $49,000 33,400 Hint Print References Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $13,300 in cash; $48,600 in accounts receivable; $5,500 in accounts payable; and a $3,000 balance in loans payable. A minimum cash balance of $13,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($5,000 per month), and rent ($7,500 per month). (1) Prepare a cash receipts budget for July, August, and September. (2) Prepare a cash budget for each of the months of July, August, and September. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a cash budget for each of the months of July, August, and September. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.) Homework Chapter 7 Saved Help Save Exit Submit Check my work 1 Cash Budget For July, August, and September July August $ 13,300 $ 13,000 September Beginning cash balance 5 points Cash sales Collections on account 12,600 48,600 16,200 50,400 9,800 64,800 eBook Total cash available 74,500 79,600 Hint Cash payments for: Merchandise Sales commissions 32,600 Print References 42,400 6,300 5,000 7,500 30 33,400 4,900 5,000 Office salaries 8,100 5,000 7,500 Rent 7,500 Interest on bank loan Total cash payments 61,230 53,200 50,800 Preliminary cash balance Additional loan (loan repayment) Ending cash balance Loan balance August September July 3,000 Loan balance - Beginning of month $ Additional loan (loan repayment) Loan balance - End of month