Please help me out! How do I prepare cash budget for April, May and June as well as in total for the quarter?
a. Budgeted monthly absorption costing income statements for AprilJuly are: April May June July Sales $ 660,000 $ 830,000 $ 540,000 $ 440,000 Cost of goods sold 462,000 581,000 378,000 308,000 Gross margin 198,000 249,000 162,000 132,000 Selling and administrative expenses: Selling expense 84,000 103,000 65,000 44,000 Administrative expense* 47,000 63,200 39,800 42,000 Total selling and administrative expenses 131,000 166,200 104,800 86,000 Net operating income $ 67,000 $ 82,800 $ 57,200 $ 46,000 *Includes $26,000 of depreciation each month. b. Sales are 20% for cash and 80% on account. c. Sales on account are collected over a three-month period with 10% collected in the month of sale; 70% collected in the rst month following the month of sale; and the remaining 20% collected in the second month following the month of sale. February's sales totaled $250,000, and March's sales totaled $265,000. d. Inventory purchases are paid for within 15 days. Therefore, 50% ofa month's inventory purchases are paid for in the month of purchase. The remaining 50% is paid in the following month. Accounts payable at March 31 for inventory purchases during March total $120,400. e. Each month's ending inventory must equal 20% of the cost of the merchandise to be sold in the following month. The merchandise inventory at March 31 is $92,400. f. Dividends of $33,000 will be declared and paid in April. 9. Land costing $41,000 will be purchased for cash in May. h. The cash balance at March 31 is $55,000; the company must maintain a cash balance of at least $40,000 at the end of each month. i. The company has an agreement with a local bank that allows the company to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $200,000. The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. The company would, as far as it is able, repay the loan plus accumulated interest at the end of the ouarter. Prepare a cash budget for April, May, and June as well as in total for the quarter. (Cash deficiency, repayments and interest should be indicated by a minus sign.) Garden Sales, Inc. Cash Budget For the Quarter Ended June 30 April May June Quarter Beginning cash balance Add collections from customers Total cash available 0 0 0 0 Less cash disbursements: Purchases for inventory Selling expenses Administrative expenses Land purchases Dividends paid Total cash disbursements 0 O 0 0 Excess (deficiency) of cash available over disbursements 0 0 0 0 Financing: Borrowings Repayment Interest Total financing 0 O 0 O Ending cash balance $ 0 $ 0 0 0
