Monthly Cash Budget

Grove, Inc. is a wholesaler for its only product, deluxe wireless electric drills, which sell for $$88$ each and cost Grove $$53$ each. On December $1,$ Grove's management requested a cash budget for December. The following selected account balances at November $30,$ were gathered by the accounting department:

Cash $$135,000$

Marketable securities $($at cost$)210,000$

Accounts receivable $($all trade$)1,710,000$

Inventories $(15,000$ units$)795,000$

Operating expenses payable $140,400$

Accounts payable $($all merchandise$)583,200$

Note payable $($due $12/31)393,000$

Actual sales for the months of October and November were $20,000$ and $30,000$ units, respectively. Projected unit sales for December and January are $50,000$ and $40,000,$ respectively. Experience indicates that $50\%$ of sales should be collected in the month of sale, $30\%$ in the month following sale, and the balance in the second month following sale. Uncollectible accounts, returns, and allowances are negligible.

Planned purchases should provide ending inventories equal to $30\%$ of next month's unit sales volume. Approximately $70\%$ of the purchases are paid for in the month of purchase and the balance in the following month.

Monthly operating expenses are budgeted at $$7\mathrm{.}10$ per unit sold plus a fixed amount of $$189,000$ including depreciation of $$81,000.$ Except for depreciation, $60\%$ of operating expenses are paid in the month incurred and the balance in the following month. Interest expense is included in operating expenses.

Special anticipated year$-$end transactions include the following:

$1.$ Declaration of a $$22,500$ cash dividend to be paid $2$ weeks after the December $20$ date of record.

$2.$ Sale of one$-$half of the marketable securities held on November $30$ a gain of $$21,000$ is anticipated.

$3.$ Pay off the note payable due December $31.$

$4.$ Trade$-$in of an old computer originally costing $$675,000$ and now having accumulated depreciation of $$540,000$ at a gain of $$157,500$ on a new computer costing $$1,380,000.$ Sufficient cash will be paid at the time of trade$-$in so that only $50\%$ of the total price will have to be financed.

$5.$ Grove's treasurer has a policy of maintaining a minimum month$-$end cash balance of $$135,000$ but wants to raise this to $$225,000$ at December $31.$ She has a standing arrangement with the bank to borrow any amount up to a limit of $$450,000.$

Prepare a cash budget for Grove, Inc., for December.

Collections in December from customers:

From October sales Answer $1$

$0$

From November sales Answer $2$

$0$

From December sales Answer $3$

$0$

Total collections Answer $4$

$0$

Payments on account for merchandise purchases:

November December

Unit Sales Answer $5$

$0$

Answer $6$

$0$

Ending inventories Answer $7$

$0$

Answer $8$

$0$

Total units to be available Answer $9$

$0$

Answer $10$

$0$

Beginning inventories Answer $11$

$0$

Answer $12$

$0$

Units to be purchased Answer $13$

$0$

Answer $14$

$0$

Total dollar purchases Answer $15$

$0$

Answer $16$

$0$

Portion paid in December Answer $17$

$0$

Answer $18$

$0$

Payment of operating expenses:

November December

Total variable operating expenses Answer $19$

$0$

Answer $20$

$0$

Fixed operating expenses Answer $21$

$0$

Answer $22$

$0$

Total operating expenses Answer $23$

$0$

Answer $24$

$0$

Monthly depreciation Answer $25$

$0$

Answer $26$

$0$

Operating expenses requiring payment Answer $27$

$0$

Answer $28$

$0$

Amounts to be paid in December Answer $29$

$0$

Answer $30$

$0$

Cash required at time of computer purchase:

Cost of new computer Answer $31$

$0$

Book value of old computer Answer $32$

$0$

Gain on trade$-$in Answer $33$

$0$

Total trade$-$in allowance Answer $34$

$0$

Balance owing at trade$-$in Answer $35$

$0$

Portion to be financed Answer $36$

$0$

Cash payment required Answer $37$

$0$

Grove, Inc.

Cash Budget

For the Month Ended December $31$

Beginning cash balance Answer $38$

$0$

Cash receipts:

Collections from customers $($calculated above$)$ Answer $39$

$0$

Answer $40$

Answer $41$

$0$

Short$-$term borrowing Answer $42$

$0$

Cash available Answer $43$

$0$

Cash disbursements:

Payments on accounts payable $($calculated above$)$ Answer $44$

$0$

Payments of operating expenses payable $($calculated above$)$ Answer $45$

$0$

Down payment on computer $($calculated above$)$ Answer $46$

$0$

Answer $47$

Answer $48$

$0$

Total cash disbursements Answer $49$

$0$

Ending cash balance Answer $50$

$0$

Please answer all parts of the question.