QPR 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: SHOW ME HOW EXCEL TEMPLATE Sales ...... Manufacturing costs.............. Selling and administrative expenses .......... Capital expenditures ...... June $160,000 66,000 40,000 July $185,000 82,000 46,000 August + $200,000 105,000 51,000 120,000 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 1 include 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 1 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. Answer 2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller? E F G H I J K L M N O Q R S T U V W | ABC 1 Problem 21(7)-4B Name: Section: Score: 19% 15 June August Key Code Key code here] 8 Instructions 9 Answers are entered in the cells with gray backgrounds. 10 Cells with non-gray backgrounds are protected and cannot be edited. 11 An asterisk (*) will appear to the right of an incorrect entry. The essay answer will not be graded. 12 Enter a zero in cells you would otherwise leave blank. 13 14 1. Mercury Shoes Inc. Cash Budget For the Three Months Ending August 31 July Estimated cash receipts from: Cash sales Colections from accounts receivable Total cash receipts Estimated cash payments for: Manufacturing costs Seling and administrative expenses Capital cxpenditures Other purposes: 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 Percentage June July August April sales May sales: Collected in June Collected in July June sales: 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 [Key essay answer here] Art 55 WRD FinMan 14e_PR 217)-48 Home Insert Draw Page Layout Formulas Data Review View v AA Paste Conditional Formatting Format as Table set Cell Styles c2 x fx Format X 8 Instructions 9 Answers are entered in the cells with gray backgrounds 10 Cells with non-gray backgrounds are protected and cannot be edited 11 An stensk C) will appear to the right of an income entry. The y answer will not be graded 12 Entra e n cols you would otherwise leave blank Mercury Shoes Inc. Cash Budget For the Three Months Ending August June Estimated cash receipts from Cash sales Collections from counts receivable Total cash receipts Estimated cash payments for Manufacturing costs Selling and administrative expenses Capital expenditures Other purposes Income tax Total cash payments Cash increase idecrease) Cash balance at beginning of month Cash balance at end of month Minimum cash balance ERCOSS deficiency Supporting calculations: Colections of accounts receivable May sales: Home Insert Draw Page Layout Formulas WRD FinMan 14e PR 21(7)-4B Data Review View A x Conditional Formatting Formatas Table fx E Format Supporting calculations Collections of accounts receivable: Al sales May sales: Collected in Collected in July June sales Collected in July Colected in August July sales Payments for menulecturing Paid in June incurred in May noured in June Total Paid in July incurred in June incurred in July Paid in August noured Incurred in August Total Key essay answer there Home Insert Draw Page Layout WRD FinMan 14PR 217)-43 Formulas Data Review View C C2X fx Format Kay sayanswer heel SESSE8888888