Exercise 20-32A 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		$	63,800				$	80,200				$	48,200
Cash payments for merchandise			40,800					33,400					34,200

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 $12,500 in cash; $45,200 in accounts receivable; $4,700 in accounts payable; and a $2,200 balance in loans payable. A minimum cash balance of $12,200 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 ($4,200 per month), and rent ($6,700 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.) KELSEY Cash Budget For July, August, and September July August $ 12,500 September Beginning cash balance Cash sales 57,960 67,080 73,800 Total cash available Cash payments for: Total cash payments 0 Preliminary cash balance Ending cash balance Loan balance August September July 2,200 $ Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month