Problem 22-2A (Algo) Manufacturing: Cash budget and schedule of cash payments LO P2

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Built-Tight is preparing its master budget. Budgeted sales and cash payments follow:

	July	August	September
Budgeted sales	$ 54,000	$ 70,000	$ 58,000
Budgeted cash payments for
Direct materials	15,160	12,440	12,760
Direct labor	3,040	2,360	2,440
Overhead	19,200	15,800	16,200

Sales to customers are 15% cash and 85% on credit. Sales in June were $51,500. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $55,000 in cash and $4,000 in loans payable. A minimum cash balance of $55,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $55,000. Interest is 1% per month based on the beginning-of-the-month loan balance and is paid at each month-end. Any preliminary cash balance above $55,000 is used to repay loans at month-end. Expenses are paid in the month incurred and consist of sales commissions (10% of sales), office salaries ($3,000 per month), and rent ($5,500 per month).

BUILT-TIGHT
Schedule of Cash Receipts from Sales
	July	August	September
Sales	$ 54,000	$ 70,000	$ 58,000
Cash receipts from:
Cash sales
Collections of prior period sales
Total cash receipts	$ 0	$ 0	$ 0

BUILT-TIGHT
Cash Budget
	July	August	September
Beginning cash balance
Add: Cash receipts
Total cash available
Less: Cash payments for
Direct labor
Direct materials
Overhead
Sales commissions
Office salaries
Rent
Interest on loan
Total cash payments	0	0	0
Preliminary cash balance
Loan activity
Additional loan
Repayment of loan to bank
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