Monthly Cash Budget Sutter, Inc. is a wholesaler for its only product, deluxe wireless rechargeable electric shavers, which sell for $70 each and cost Sutter $48 each. On June 1, 2019, Sutter's management requested a cash budget for June. The following selected account balances at May 31, 2019, were gathered by the accounting department: Cash Marketable securities (at cost) $56,000 160,000 Accounts receivable (all trade) 2,170,000 Inventories (12,000 units) Operating expenses payable 576,000 196,800 Accounts payable (all merchandise) 902,400 Note payable (due 12/31/2019) 600,000 Actual sales for April and May were 30,000 and 50,000 units, respectively. Projected unit sales for June and July are 40,000 and 20,000, 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 60% of the purchases are paid for in the month of purchase and the balance in the following month. Monthly operating expenses are budgeted at $9.60 per unit sold plus a fixed amount of $288,000 including depreciation of $112,000. Except for depreciation, 70% 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 June transactions include the following: 1. Declaration of a $60,000 cash dividend to be paid 2 weeks after the June 20 date of record. 2. Sale of all but $40,000 of the marketable securities held on May 31; a gain of $18,000 is anticipated. 3. Payment of $50,000 installment on the note payable. 4. Trade-in of an old company plane originally costing $300,000 and now having accumulated depreciation of $200,000 at a gain of $160,000 on a new plane costing $2,000,000. 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. Sutter's treasurer has a policy of maintaining a minimum month-end cash balance of $40,000 and has a standing arrangement with the bank to borrow any amount up to a limit of $400,000. Prepare a cash budget for Sutter, Inc., for June 2019. Collections in June from customers: From April sales $ 420,000 prane ong time of trade-in so that only 50% of the total price will have to be financed 5. Sutter's treasurer has a policy of maintaining a minimum month-end ca Prepare a cash budget for Sutter, Inc., for June 2019. Collections in June from customers: From April sales $ 420,000 From May sales 1,050,000 From June sales 1,400,000 Total collections $ 2,870,000 Payments on account for merchandise purchases: May June Unit Sales 50,000 40,000 Ending inventories 12,000 6,000 Total units to be available 62,000 46,000 Beginning inventories 15,000 12,000 Units to be purchased 47,000 34,000 Total dollar purchases $ 2,256,000 $1,632,000 Portion paid in June $ 0x $ 1,881,660 x Payment of operating expenses: May June Total variable operating expenses $ 48,000 * $ 38,400 x Fixed operating expenses 176,000 x 176,000 x Total operating expenses 656,000 x 560,000 x Monthly depreciation 112,000 112,000 Operating expenses requiring payment $ 544,000 * $ 448,000 x Amounts to be paid in June $ 0 * $ 476,800 x Cash required at time of plane purchase: Cost of new plane Book value of old plane Gain on trade-in Total trade-in allowance $ 2,000,000 $ 100,000 160,000 260,000 1,740,000 Balance owing at trade-in Portion to be financed Cash payment required Sutter, Inc. 870,000 x 870,000 x Cash Budget For the Month Ended June 30, 2019 Beginning cash balance $ 56,000 Cash receipts: Collections from customers (calculated above) Sale on securities Short-term borrowing Cash available Cash disbursements: Payments on accounts payable (calculated above) Payments of operating expenses payable (calculated above) Payment on airplane (calculated above) Paymenton note payable 2,870,000 178,000 x 214,400 x 3,262,400 x 1,881,600 476,800 x 870,000 x 50,000 Total cash disbursements Ending cash balance 3,278,400 x $ 40,000 May June Total variable operating expenses $ 48,000 * $ 38,400 x Fixed operating expenses 176,000 x 176,000 x Total operating expenses 656,000 x 560,000 x Monthly depreciation 112,000 112,000 Operating expenses requiring payment $ 544,000 x $ 448,000 x Amounts to be paid in June $ 0 x $ 476,800 x Cash required at time of plane purchase: Cost of new plane $ 2,000,000 Book value of old plane $ 100,000 Gain on trade-in 160,000 Total trade-in allowance 260,000 Balance owing at trade-in Portion to be financed Cash payment required 1,740,000 870,000 x 870,000 x Sutter, Inc. Cash Budget For the Month Ended June 30, 2019 Beginning cash balance $ 56,000 Cash receipts: Collections from customers (calculated above) Sale on securities Short-term borrowing Cash available 2,870,000 178,000 x 214,400 x 3,262,400 x Cash disbursements: Payments on accounts payable (calculated above) Payments of operating expenses payable (calculated above) Payment on airplane (calculated above) 1,881,600 476,800 x 870,000 x Type here to search