Schedule of Expected Cash Collections

Schedule of Expected Cash Disbursements -

Merchandise Purchases Schedule of Expected Cash Disbursements -

Operating Expenses Combined Cash Budget

Budgeted Balance Sheet

Bobcat Boutique is a merchandising business located downtown in San Marcos, Texas. The owners are Texas State alumni and they would like to maximize their profits. They understand that accurate budgeting will help obtain this goal. The company is completing its second year of operations and is preparing to build its master budget for the second quarter. The budget will detail each quarters activity and the total for the quarter.

The master budget will be based on the following information:

Sales were budgeted at $50,000 for September.

Expected sales are $60,000 for October,

$72,000 for November, $90,000 for December,

$48,000 for January.

The gross margin is 25% of sales. Sales are projected to be 60% for cash and 40% on credit.

Credit sales are collected in the month following the sale. The September accounts receivable are a result of the September credit sales. There are no bad debts.

Each months ending inventory should equal 80% of the following months budgeted cost of goods sold. Merchandise Inventory Purchases are paid as follows; 50% of a months inventory purchases is paid for in the month of purchase; the other 50% is paid for in the following month.

The accounts payable at September 31 are the result of September purchases of inventory. Monthly operating expenses are as follows: commissions are 12% of sales; rent is $2,500 per month, other operating expenses (excluding depreciation) are 6% of sales. Assume these expenses are paid monthly. Deprecation is $900 per month.

Equipment costing $1,500 will be purchased for cash in October.

Income tax is estimated to be 28% of operating income. Estimated taxes are accrued each month and paid in cash in the last month of the quarter.

Management would like to maintain a minimum cash balance of at least $3,000 at the end of each month. The boutique has an agreement with a local bank that allows them to borrow in increments of $1,000 at the beginning of each month, up to a total loan balance of $20,000.

The interest rate on these loans is 1% per month and for simplicity we will assume that interest is not compounded. They would, as far as it is able, repay the loan plus accumulated interest at the end of the quarter. T

he balance sheet as of September 31, is as follows:

Assets September 31

Cash $8,000

Accounts Receivable 20,000

Inventory 36,000

Plant & Equipment,

net 120,000

Total assets $184,000

Liabilities & Equity Accounts Payable $21,750

Retained Earnings 162,250

Total liabilities & equity $184,000

	October	November	December	Total
Collections of:
Cash Sales
Credit Sales
Total Collections
Payments of:
Current Month Purchases
Prior Month Purchases
Total Payments - Merchandise Inventory Purchases
Commissions
Rent
Other Operating Expenses
Total Payments - Operating Expenses
Beginning Cash Balance
Cash Collections
Cash Available
Cash Payments:
Merchandise Inventory Purchases
Operating Expenses
Equipment Purchase
Income Taxes
Ending Cash Balance before Financing
New Borrowings
Debt Repayments
Interest Payments
Ending Cash Balance after Financing
Cash
Accounts Receivable
Inventory
Plant & Equipment, net
Total assets
Accounts Payable
Retained Earnings
Total liabilities & equity