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P9-21 Cash Budget for One Month The treasurer of Househall Company. Lad states, "Our monthly financial buget show me our cash surplus or deficiency and assures me that an unexpected cash shortage will not occur." A cash beatget is now being prepared for May. The following information has been gath- cred to assist in preparing the budget Budgeted sales and production requirements are as follows: Bugeted sales $650.000 Production requirements Raw materials to be used 301.000 Direct laber cost 85.000 The raw materials inventory is budgeted to increase by $6,000 during the month other inventories will not change. h Customers are allowed cash discount on accounts paid within 10 days after the end of the month of sale. Only 50% of the payments made in the month following sak fall within the discount period Profit Planning 407 January DOO 25.000 c Accounts receivable outstanding at April 30 were as follows: Percentage Accounts of Sales Percentage Receivable Uncollected telle Collected Month Sales at April 20 at April 20 in May $300,000 $ 8.300 February 31.800 March 4. 47,00 10 April 550.000 550.000 100 Bad debts are negligible. All January receivables outstanding will have been collected by the end of May, and the collection pattern since the time of sale will be the same in May as in previous months 4. Raw materials purchases are paid in the month following purchase, and $320,000 in accounts payable for purchases was outstanding at the end of April c. Accrued wages on April 30 were $11,000 All Muy payroll amounts will be paid within the month of May. . Budgeted operating expenses and overhead costs for May are as follows: Overhead and other charges Indirect labe 534.000 Real estate taxes 1.500 Depreciation Utilities 1 500 Ware benefits 9.000 Fire insurance 1.500 Amortif penis SO Spodlage of materials in the warehouse 1.500 $79.000 Sales salaries 45.000 Administrative salaries 15.000 Real estate taxes are paid in August each year. 1. Utilities are billed and paid within the month. 1. The $9,000 monthly charge shove for "Wage benefits includes the following Unemployment instance (payable monthly) SL_150 Canada pel plan (yale wy) Holiday pay which represents of the annual cost (May holidays will require $2.000 1.100 Company pension fund. Including Voof a $10.00 adjustment that was paid in January SO Group Insurance (payable quarterly, with the last payment having been made in February) 730 Fire insurance premiums were paid in January, in advance. Shipping costs for May will be $1,000, all payable during the month The cash balance on April 30 was 55,750. 1. Prepare a schedule showing expected cash collections for May 2. Prepare a cash budget for May in good form. 3. Comment briefly on the treasurer's statement quoted at the beginning of the problem (SMA, adapted) Required