Problem 7-17B Schedules of Expected Cash Collections and Disbursements [LO7-2, LO7-4, LO7-8] Ojal Products, a distributor of organic beverages, needs a cash budget for September. The following information is available: a. The cash balance at the beginning of September is $12,800. b. Actual sales for July and August and expected sales for September are as follows: July August September Cash sales $ 6,100 $ 4,100 $ 9,500 Sales on account 21,000 26,000 37,000 Total sales 27,100 30,100 46,500 Sales on account are collected over a three-month period as follows: 10% collected in the month of sale, 65% collected in the month following sale, and 21% collected in the second month following sale. The remaining 4% is uncollectible. c. Purchases of inventory will total $25,000 for September. Thirty percent of a month's inventory purchases are paid for during the month of purchase. The accounts payable remaining from August's inventory purchases total $16,000, all of which will be paid in September d. Selling and administrative expenses are budgeted at $14,000 for September of this amount, $4,000 is for depreciation e. Equipment costing $18,000 will be purchased for cash during September, and dividends totaling $4,000 will be paid during the month. f. The company maintains a minimum cash balance of $8,800. An open line of credit is available from the company's bank to bolster the cash balance as needed Required: 1. Prepare a schedule of expected cash collections for September. (Do not round intermediate calculations.) Ojal Products Schedule of Expected Cash Collections September cash sales September collections on account: July sales August sales September sales Total cash collections 2. Prepare a schedule of expected cash disbursements for inventory purchases for September. (Do not round intermediate calculations.) Ojai Products Schedule of Expected Cash Disbursements Payments to suppliers: August purchases September purchases Total cash payments 3. Prepare a cash budget for September. Indicate in the financing section any borrowing that will be needed during September. Assume that any interest will not be paid until the following month. Ojai Products Cash Budget For the Month of September Cash balance, September 1 Add cash receipts: Collections from customers Total cash available before current financing Less disbursements: Payments to suppliers for inventory Selling and administrative expenses Equipment purchases Dividends paid Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments Interest Total financing Cash balance, September 30
