Problem 7-17B Schedules of Expected Cash Collections and Disbursements [LO7-2, LO7-4, LO7-8]

Ojai 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 $13,300.

b.Actual sales for July and August and expected sales for September are as follows:

July August September

Cash sales$7,100 $5,100 $10,500

Sales on account 21,500 26,500 37,500

Total sales 28,600 31,600 48,000

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 $24,000 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 $15,000, all of which will be paid in September.

d.

Selling and administrative expenses are budgeted at $14,500 for September. Of this amount, $4,500 is for depreciation.

e.

Equipment costing $19,000 will be purchased for cash during September, and dividends totaling $3,500 will be paid during the month.

f.

The company maintains a minimum cash balance of $9,300. An open line of credit is available from the companys bank to bolster the cash balance as needed.

Required:

1.Prepare a schedule of expected cash collections for September. (Do not round intermediate calculations.)

Sept. 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.)

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.

Cash balance, Sept. 1st:

Add cash receipts:

Collections from customers:

Total cash available before current financing:

Less disbursements:

Payments to suppliers for inventory:

Selling and administrative expenses:

Equipments purchases:

Dividends paid:

Total disbursements:

Excess (deficiency) of cash available over disbursements

Financing:

Borrowings:

Repayments:

Interest:

Total financing:

Cash balance, Sept. 30th: