Question
Required information Problem 22-2A (Algo) Manufacturing: Cash budget and schedule of cash payments LO P2 [The following information applies to the questions displayed below.] Built-Tight
Required information
Problem 22-2A (Algo) Manufacturing: Cash budget and schedule of cash payments LO P2 [The following information applies to the questions displayed below.] Built-Tight is preparing its master budget. Budgeted sales and cash payments follow: July August September Budgeted sales $ 62,500 $ 78,500 $ 49,500 Budgeted cash payments for Direct materials 16,460 13,740 14,060 Direct labor 4,340 3,660 3,740 Overhead 20,500 17,100 17,500 Sales to customers are 25% cash and 75% on credit. Sales in June were $58,000. All credit sales are collected in the month following the sale. The June 30 balance sheet includes balances of $21,000 in cash and $5,300 in loans payable. A minimum cash balance of $21,000 is required. Loans are obtained at the end of any month when the preliminary cash balance is below $21,000. 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 $21,000 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 ($4,300 per month), and rent ($6,800 per month).
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