Part 2

Consider the budgeted income statement for Happy Turtles for the month ended 30 June 2017 below:-

			$	$
Sales Less: Cost of Goods Sold				290,000
Inventory, 31 May 2017			50,000
Purchases			192,000
Available for sale			242,000
Inventory, 30 June 2017			(40,000)
				202,000
Gross profit				88,000

Less: Operating expenses

Wages 36,000

Utilities 5,000

Advertising 10,000

Depreciation 1,000

Office expenses 4,000

Insurance and property taxes 3,000 (59,000)

Operating profit 29,000

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Additional information:

• The cash balance on 31 May 2017 $15,000.
• Sales proceeds are collected as follows: 80% the month of sale; 10% the second month; and 10% the third month; explain what % will be use and why the other % will not be use.
• Accounts receivable are $ 44,000 on 31 May 2017 consisting of $ 20,000 from April 2017 sales and $24,000 from May 2017 sales, show the calculation and write process of getting the answer.
• Accounts payable on 31 May 2017 are $ 145,000.
• Happy Turtles pay 25% of purchases during the month of purchase and the remainder during the following month, what is the month of purchase, specify your answers.
• All operating expenses requiring cash are paid during the month of recognition, except that insurance and property taxes are paid annually in December for the forthcoming year.
• do we put amortization on the cash budget, write the reason.

Required:

Prepare a cash budget for June 2017. Confine your analysis to the given data. Ignore income taxes.