Schedule of Cash Payments for a Service Company

SafeMark Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$97,800
April	90,000
May	81,900

Depreciation, insurance, and property taxes represent $20,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 66% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May.

SafeMark Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	$fill in the blank 1
Paid in April		$fill in the blank 2
April expenses:
Paid in April		fill in the blank 3
Paid in May			$fill in the blank 4
May expenses:
Paid in May			fill in the blank 5
Total cash payments	$fill in the blank 6	$fill in the blank 7	$fill in the blank 8

Cash Budget

The controller of Sonoma Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:

	May		June		July
Sales	$86,000		$90,000		$95,000
Manufacturing costs	34,000		39,000		44,000
Selling and administrative expenses	15,000		16,000		22,000
Capital expenditures	_		_		80,000

The company expects to sell about 10% of its merchandise for cash. Of sales on account, 70% are expected to be collected in the month following the sale and the remainder the following month (second month following sale). Depreciation, insurance, and property tax expense represent $3,500 of the estimated monthly manufacturing costs. The annual insurance premium is paid in September, 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 May 1 include cash of $33,000, marketable securities of $40,000, and accounts receivable of $90,000 ($72,000 from April sales and $18,000 from March sales). Sales on account for March and April were $60,000 and $72,000, respectively. Current liabilities as of May 1 include $6,000 of accounts payable incurred in April for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $14,000 will be made in June. Sonomas regular quarterly dividend of $5,000 is expected to be declared in June and paid in July. Management wants to maintain a minimum cash balance of $30,000.

Required:

1. Prepare a monthly cash budget and supporting schedules for May, June, and July 2016. Input all amounts as positive values except overall cash decrease and deficiency which should be indicated with a minus sign.

Sonoma Housewares Inc.
Cash Budget
For the Three Months Ending July 31
	May	June	July
Estimated cash receipts from:
Cash sales	$fill in the blank 54b4610a106afd2_1	$fill in the blank 54b4610a106afd2_2	$fill in the blank 54b4610a106afd2_3
Collection of accounts receivable	fill in the blank 54b4610a106afd2_4	fill in the blank 54b4610a106afd2_5	fill in the blank 54b4610a106afd2_6
Total cash receipts	$fill in the blank 54b4610a106afd2_7	$fill in the blank 54b4610a106afd2_8	$fill in the blank 54b4610a106afd2_9
Estimated cash payments for:
Manufacturing costs	$fill in the blank 54b4610a106afd2_10	$fill in the blank 54b4610a106afd2_11	$fill in the blank 54b4610a106afd2_12
Selling and administrative expenses	fill in the blank 54b4610a106afd2_13	fill in the blank 54b4610a106afd2_14	fill in the blank 54b4610a106afd2_15
Capital expenditures			fill in the blank 54b4610a106afd2_16
Other purposes:
Income tax		fill in the blank 54b4610a106afd2_17
Dividends			fill in the blank 54b4610a106afd2_18
Total cash payments	$fill in the blank 54b4610a106afd2_19	$fill in the blank 54b4610a106afd2_20	$fill in the blank 54b4610a106afd2_21
Cash increase or (decrease)	$fill in the blank 54b4610a106afd2_22	$fill in the blank 54b4610a106afd2_23	$fill in the blank 54b4610a106afd2_24
Cash balance at beginning of month	fill in the blank 54b4610a106afd2_25	fill in the blank 54b4610a106afd2_26	fill in the blank 54b4610a106afd2_27
Cash balance at end of month	$fill in the blank 54b4610a106afd2_28	$fill in the blank 54b4610a106afd2_29	$fill in the blank 54b4610a106afd2_30
Minimum cash balance	fill in the blank 54b4610a106afd2_31	fill in the blank 54b4610a106afd2_32	fill in the blank 54b4610a106afd2_33
Excess or (deficiency)	$fill in the blank 54b4610a106afd2_34	$fill in the blank 54b4610a106afd2_35	$fill in the blank 54b4610a106afd2_36

2. The budget indicates that the minimum cash balance be maintained in July. This situation can be corrected by and/or by the of the marketable securities, if they are held for such purposes. At the end of May and June, the cash balance will the minimum desired balance.