Question 1 CASH BUDGET EXTRA QUESTION Q1 ABC Store has applied for a loan at Riyad Bank. Before the loan is approved, the bank has requested a cash budget at June 30, 2017. As the controller of the store; you have assembled the following information: May 31 balance sheet information: Cash Account Receivable Inventory balance Equipment Accumulated depreciation Account Payable Owners' Equity $50,200 $15,300 $11,900 $80,800 SI 2,400 $8,300 $137,500 Planned June operating activity information: a. Purchase inventory costing $60,000 b. Sales $85,000 c. Salary of $12,000 for cash d. Depreciation expenses, $4,000. e. Purchase office equipment $15,000 and paid 20% cash and, the remaining will be paid in the next month. f. Other June operating expenses, including income tax, total $34,000, 75% of which will be paid this month and remaining in the following month, Utility expenses of $6,000 ( 75% of cash), 8. Incur advertising expense $5,000 and it will be paid in the next month July operating information:- a. Sales of $180,000 b. Purchase of $170,000 c. Salary of $25,000 for cash. d. Other operating expenses, income taxes $7,000 of which 60% will be paid for cash. Supplies expenses of $2,000 cash, Rent expenses of $1,500. e Owner invest additional capital $20,000 f. Sale an old computer for $500 cash g. Paid utilities expense $10,000 h. Bought a land costing $200,000 and paid 15% for this transaction and the remaining is on notes payable The company paid policy is to pay 40% of purchase within current month and the remainder for the next month. The company collects cash from customer 60% in the current month and the remainder for the next month. The company need to maintain $20,000 cash balance every month, Instructions: Prepare the cash budget for the month of June and July 2017 TOTAL SALES CURRENT MONTH 60% CURRENT 40% AFTER 1 MONTH JUNE 60% CURRENT 40% AFTER 1 MONTH JULY COLLECTION & PAYMENT POLICY SCHEDULE 1 EXPECTED COLLECTION FROM CUSTOMER BS 66 MAY JUNE JULY TOTAL COLLECTIONS 7- $ $ $ SCHEDULE 2 EXPECTED PAYMENT FOR PURCHASES ACCT PAYABLES FOR THE MONTH 40% CURRENT 50% AFTER 1 MONTH 40% CURRENT 60% AFTER 1 MONTH BS 6 MAY JUNE JULY TOTAL PAYMENTS 70 JUNE JULY BS Beginning cash balance Add: Receipts Collections from customers [See Schedule (1) 7 f Sale of computer 7- Equity capital from owners Total available cash Less: Disbursements Direct materials (See Schedule 2] Salary 7- 0 6- Purchase of office equipment 20% cash of the amount Selling and administrative & income tax expenses 7- d Y 7- Utility expenses Advertising expenses 6- 8 009 7- h Purchase of land Total disbursements Excess (deficiency) of available cash over cash disbursements Financing Add: Borrowings Less: Repayments Ending cash balance
