Problem 20-2A Manufacturing: Cash budget LO P2 Built-Tight is preparing its master budget for the quarter ended September 30, 2015. Budgeted sales and cash payments for product costs for the quarter follow: July $ 56,000 August $ 72,000 September $ 56,000 Budgeted sales Budgeted cash payments for Direct materials Direct labor Factory overhead 15,560 3,440 19,600 12,840 2,760 16,200 13,160 2,840 16,600 Sales are 20% cash and 80% on credit. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $15,000 in cash: $44,400 in accounts receivable; $3,900 in accounts payable; and a $4.400 balance in loans payable. A minimum cash balance of $15,000 is required. Loans are obtained at the end of any month when a cash shortage occurs. Interest is 1% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repald at the end of the month. Operating expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,400 per month), and rent ($5,900 per month). Problem 20-2A Part 2 2. Prepare a cash budget for each of the months of July, August, and September. (Negative balance and Loan repayment amount should be indicated with minus sign.) BUILT-TIGHT Cash Budget For July, August, and September July August September Beginning cash balance $ 15,000 15,000 $ 25,504 Cash receipts from customers Total cash available Cash disbursements: Payments for direct materials Payments for direct labor Payments for overhead Sales commissions Office salaries Rent Interest on bank loan July August Preliminary cash balance Additional loan (loan repayment) Ending cash balance 0 0 0 Loan balance July August September Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month Problem 20-2A Part 1 1. Prepare a cash receipts budget for July, August, and September. (Negative balance and Loan repayment amount should be indicated with minus sign.) BUILT-TIGHT Cash Receipts Budget For July, August, and September July August September Sales $ 56,000 $ 72,000 $ 56,000 Less ending accounts receivable (44,800) (57,600) (44,800) Cash receipts from Cash sales 11,200 14.400 11,200 Collections of prior month's receivables 44,400 44,800 57,600 Total cash receipts $ 55,600 $ 59,200 $ 68,800