PR 22-48 Cash budget Obj. 5 The controllor of Mercury Shoes Inc. Instructs you to prepare a monthly cath budget for the next three months. You are presented with the following budget information: Me Sales Manufacturing costs Selling and administrative ses Capital expenditures June 5160.000 66.000 40000 July S185.000 62.000 45.000 Aug $200.000 105.000 51.000 120.000 The company expect to sell about 10% of its merchandise for cash Of sales on account 60% are expected to be collected in the month following the salt and the remainder the following month (second mother al Depreciation. Insurance and property tax apente represent $12.000 of the estimated monthly manatiling costs. The animal immurance premium is pald in February and the annual property taxes ace paid aber of the emainder of the manufacturing cost 80% e expected to be paid in the month Llored the balance in the folloveing month of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of $42,000, marketable securities of $25,000, and accounts receivable of $198.000 ($150.000 from May sales and $48.000 from April sales). Sales on account in April and Maywe $120.000 and $150.000, respectively. Current liabilities as of June 1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cath in the period they are incurred. An estimated income tax payment of $24,000 will be made in July Mercury Shoes regular quarterly dividend of $15,000 is expected to be declared in July and paid in August. Management wants to maintain a minimum cash balance of $40,000, Instructions 1. Prepare a monthly cash budget and supporting schedules for June July, and August On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? PR 22-48 Cash budget Obj. 5 The controllor of Mercury Shoes Inc. Instructs you to prepare a monthly cath budget for the next three months. You are presented with the following budget information: Me Sales Manufacturing costs Selling and administrative ses Capital expenditures June 5160.000 66.000 40000 July S185.000 62.000 45.000 Aug $200.000 105.000 51.000 120.000 The company expect to sell about 10% of its merchandise for cash Of sales on account 60% are expected to be collected in the month following the salt and the remainder the following month (second mother al Depreciation. Insurance and property tax apente represent $12.000 of the estimated monthly manatiling costs. The animal immurance premium is pald in February and the annual property taxes ace paid aber of the emainder of the manufacturing cost 80% e expected to be paid in the month Llored the balance in the folloveing month of the remainder of the manufacturing costs, 80% are expected to be paid in the month in which they are incurred and the balance in the following month. Current assets as of June 1 include cash of $42,000, marketable securities of $25,000, and accounts receivable of $198.000 ($150.000 from May sales and $48.000 from April sales). Sales on account in April and Maywe $120.000 and $150.000, respectively. Current liabilities as of June 1 include $13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cath in the period they are incurred. An estimated income tax payment of $24,000 will be made in July Mercury Shoes regular quarterly dividend of $15,000 is expected to be declared in July and paid in August. Management wants to maintain a minimum cash balance of $40,000, Instructions 1. Prepare a monthly cash budget and supporting schedules for June July, and August On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller
