Question
Jackson Brothers Inc. is a distributor of mens, womens, and childrens shoes. The company imports shoes primarily from Europe and sells them to specialty clothing
Jackson Brothers Inc. is a distributor of mens, womens, and childrens shoes. The company imports shoes primarily from Europe and sells them to specialty clothing and shoe stores around the country. The companys chief accountant has gathered the following information to aid in the preparation of a cash budget for the first quarter of year 2.
January | February | March | |
---|---|---|---|
Interest revenue from investments | $2,875 | $3,123 | $2,250 |
Estimated cash payment for manufacturing costs | 1,118,575 | 1,199,678 | 1,794,455 |
Interest payments on a line of credit | 14,950 | 12,555 | 17,485 |
Income tax payments | 174,939 | ||
Purchase of factory equipment for cash | 1,384,950 | 1,447,010 | 955,408 |
Selling and administrative expense cash payments | 230,390 | 223,325 | 243,100 |
Minimum cash balance | 287,500 | 287,500 | 287,500 |
Cash balance at beginning of month | 300,885 |
The company expects to collect cash on its accounts receivable during the three months, as follows:
January: $3,139,500 | |
February: $3,118,650 | |
March: $3,121,400 |
Complete the following cash budget for Jackson Inc. by entering the appropriate values in the spaces provided. Use a minus sign to indicate the negative amount.
Jackson Brothers Inc. | |||
---|---|---|---|
Cash Budget | |||
For the Quarter Ending March 31, Year 2 | |||
| January | February | March |
Estimated cash receipts from | |||
Collections on accounts receivable | $3,139,500 | $3,118,650 |
|
Interest revenue |
|
| 2,250 |
Total cash receipts | $3,142,375 |
| $3,123,650 |
Estimated cash payments for | |||
Manufacturing costs | $1,118,575 |
|
|
Selling and administrative expenses | 230,390 |
| 243,100 |
Purchase of factory equipment |
| 1,447,010 | 955,408 |
Interest expense | 14,950 | 12,555 |
|
Income taxes | 174,939 | ||
Total cash payments |
|
| $3,185,387 |
Cash increase (decrease) |
| $239,205 |
|
Cash balance at beginning of month | 300,885 |
|
|
Cash balance at end of month |
|
|
|
Minimum cash balance |
|
| 287,500 |
Excess (deficiency) |
|
| $584,363 |
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