Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Melanie Inc. provides you with the following budgeted information for two months in year 2019: March April Sales $525,000 $675,000 Manufacturing Costs 160,000 380,000 Capital

Melanie Inc. provides you with the following budgeted information for two months in year 2019:

March April
Sales $525,000 $675,000
Manufacturing Costs 160,000 380,000
Capital Expenditures* 100,000 25,000
General and Administration Costs (including amortization) 50,000 95,000
*includes training programs, machines and buildings

Expectations:

  • Cash sales represent 20% of total sales
  • All sales on account are collected in the following month
  • 60% of Marchs $100,000 worth of capital expenditures is to be paid at the end of March. The remainder is to be paid in the following month. April's capital expenditure will be paid in May.
  • Monthly amortization represents 15% of general and administration costs
  • Manufacturing costs and general and administration costs are to be paid in the month in which they are incurred
  • Dividends of $6,000 are expected to be declared in March and paid in April
  • Melanie Inc. obtains the minimum financing needed to ensure at least a $38,500 cash balance at the end of the month through a bank loan. Assume that any amount taken out of the bank loan may be repaid only at year end.

As of March 1

Cash $19,000
Accounts Receivable* 172,000
Inventory 95,000
Long-Term Assets 95,000
Accumulated Depreciation 5,000
Accounts Payable 7,000
Dividends Payable (in March) 2,000
Notes Payable 265,000
Stockholder's Equity 103,000
*Comprised only of sales on account incurred in February

Do not enter dollar signs or commas in the input boxes. Use the negative sign for negative values. Prepare a cash budget for March and April.

Melanie Inc. Cash Budget for March and April
March April
Opening Cash Balance
Receipts:
Cash from sales
Collection from customers
Total cash available
Disbursements:
Manufacturing costs
General and admin. costs
Capital Expenditures
Dividend Payment
Total Cash Payments
Cash Excess (Deficit)
Financing Requirements:
Notes Payable
Loan Repayment
Ending Cash Balance

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Modeling

Authors: Simon Benninga

3rd Edition

0262026287, 9780262026284

More Books

Students also viewed these Accounting questions

Question

How does Disney try to redress prejudice and discrimination?

Answered: 1 week ago