Problem 21(7)-4B Excell Assignments
Instructions Answers are entered in the cells with gray backgrounds. Cells with non-gray backgrounds are protected and cannot be edited. 1 An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded. Enter a zero in cells you would otherwise leave blank. nim ARS August SS Mercury Shoes Inc. Cash Budget For the Three Months Ending August 31 June July Estimated cash receipts from: Cash sales Collections from accounts receivable Total cash receipts Estimated cash payments for Manufacturing costs Selling and administrative expenses Capital expenditures Other purposes: Income tax Pr. 21(7)-4B 4 J K L M N Income tax Dividends Total cash payments Cash increase (decrease) Cash balance at beginning of month Cash balance at end of month Minimum cash balance Excess (deficiency) Supporting calculations: Collections of accounts receivable: Sales on Account August April sales May sales Collected in June Collected in July June sales Collected in July Pr. 21(7) 4B Collected in July Collected in August July sales Payments for manufacturing costs: Costs on Account Percentage Payments Paid in June Incurred in May Incurred in June Total Paid in July Incurred in June incurred in July Total Paid in August Incurred in July Incurred in August Total Pr. 2107) 4B PR 21-4B Cash budget Obj. 5 The controller of Mercury Shoes Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information: EXCEL TEMPLATE 5160,000 66.000 July $185.000 82.000 $2.000 Sales ....... Manufacturing costs... Selling and administrative expenses Capital expenditures .... August + 200.000 105.000 51.000 120,000 45.000 The company expects to sell about 10% of its merchandise for cash. Or sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual Insurance premium is paid in February, and the annual property taxes are paid in November 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 The company expects to sell about 10% of its merchandise for cash. Of sales on account, 60% are expected to be collected in the month following the sale and the remainder the following month (second month after sale). Depreciation, insurance, and property tax expense represent $12,000 of the estimated monthly manufacturing costs. The annual insurance premium is paid in February, and the annual property taxes are paid in November. 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 1include 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 May were $120,000 and $150,000, respectively. Current liabilities as of June l include $13,000 of accounts payable incurred in May for manufacturing costs. All selling and administrative expenses are paid in cash 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 desires 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? Type here to search R e xW
