Millen Corporation is a merchandiser that is preparing a master budget for the month of July The company's balance sheet as of June 30 is shown below Millen CorporationBalance SheetJune 30 Assets Cash$120,000 Accounts receivable166,000 Inventory37,200 Plant and equipment, net of depreciation554,800 Total assets$878,000 Liabilities and Stockholders' Equity Accounts payable$93,000 Common stock586,000 Retained earnings199,000 Total liabilities and stockholders' equity$878,000 Millen's managers have made the following additional assumptions and estimates Estimated sales for July and August are $310,000 and $330,000, respectively Each month's sales are 20 cash sales and 80 credit sales Each month's credit sales are collected 30 in the month of sale and 70 in the month following the sale All of the accounts receivable at June 30 will be collected in July Each month's ending inventory must equal 20 of the cost of next month's sales The cost of goods sold is 60 of sales The company pays for 40 of its merchandise purchases in the month of the purchase and the remaining 60 in the month following the purchase All of the accounts payable at June 30 will be paid in July Monthly selling and administrative expenses are always $70,000 Each month $10,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred The company does not plan to buy or sell any plant and equipment during July It will not borrow any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July Required 1 Calculate the expected cash collections for July 2 Calculate the expected cash disbursements for merchandise purchases for July 3 cash budget for July Millen Corporation Cash Budget For the Month of July Beginning cash balance Add collections from customers Total cash available Less cash disbursements Purchase of inventory Selling and administrative expenses Total cash disbursements Excess of cash available over disbursements Financing Borrowing note Repayments note Interest Total financing Ending cash balance

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 29, 2024

Millen Corporation is a merchandiser that is preparing a master budget for the month of July. The company's balance sheet as of June 30 is

Millen Corporation is a merchandiser that is preparing a master budget for the month of July. The company's balance sheet as of June 30 is shown below:

Millen CorporationBalance SheetJune 30

Assets

Cash$120,000

Accounts receivable166,000

Inventory37,200

Plant and equipment, net of depreciation554,800

Total assets$878,000

Liabilities and Stockholders' Equity

Accounts payable$93,000

Common stock586,000

Retained earnings199,000

Total liabilities and stockholders' equity$878,000

Millen's managers have made the following additional assumptions and estimates:

Estimated sales for July and August are $310,000 and $330,000, respectively.
Each month's sales are 20% cash sales and 80% credit sales. Each month's credit sales are collected 30% in the month of sale and 70% in the month following the sale. All of the accounts receivable at June 30 will be collected in July.
Each month's ending inventory must equal 20% of the cost of next month's sales. The cost of goods sold is 60% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July.
Monthly selling and administrative expenses are always $70,000. Each month $10,000 of this total amount is depreciation expense and the remaining $60,000 relates to expenses that are paid in the month they are incurred.
The company does not plan to buy or sell any plant and equipment during July. It will not borrow any money, pay a dividend, issue any common stock, or repurchase any of its own common stock during July.

Required:

1. Calculate the expected cash collections for July.

2. Calculate the expected cash disbursements for merchandise purchases for July.

3. cash budget for July.

Millen Corporation Cash Budget For the Month of July Beginning cash balance Add collections from customers Total cash available Less cash disbursements: Purchase of inventory Selling and administrative expenses Total cash disbursements Excess of cash available over disbursements Financing: Borrowing-note Repayments-note Interest Total financing Ending cash balance