September October November

Sales $$98,000$ $$122,000$ $$161,000$

Manufacturing costs $41,00052,00058,000$

Selling and administrative expenses $34,00037,00061,000$

Capital expenditures $39,000$

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 $$8,000$ of the estimated monthly manufacturing costs. The annual insurance premium is paid in January, and the annual property taxes are paid in December. 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 September $1$ include cash of $$37,000,$ marketable securities of $$53,000,$ and accounts receivable of $$109,400($$$23,400$ from July sales and $$86,000$ from August sales$).$ Sales on account for July and August were $$78,000$ and $$86,000,$ respectively. Current liabilities as of September $1$ include $$8,000$ of accounts payable incurred in August for manufacturing costs. All selling and administrative expenses are paid in cash in the period they are incurred. An estimated income tax payment of $$15,000$ will be made in October. Bridgeport$$s regular quarterly dividend of $$8,000$ is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $$36,000.$

Required:

Question Content Area

$1.$ Prepare a monthly cash budget and supporting schedules for September, October, and November. Assume $360$ days per year for interest calculations.

Bridgeport Housewares Inc.

Cash Budget

For the Three Months Ending November $30$

Line Item Description September October November

Estimated cash receipts from:

Cash sales

$Cash sales

$98,000$

$Cash sales

$122,000$

$Cash sales

$161,000$

Collection of accounts receivable

Collection of accounts receivable

$98,000$

Collection of accounts receivable

Collection of accounts receivable

Total cash receipts $Total cash receipts

$98,000$

$Total cash receipts

$Total cash receipts

Less estimated cash payments for:

Manufacturing costs

$Manufacturing costs

$Manufacturing costs

$Manufacturing costs

Selling and administrative expenses

Selling and administrative expenses

Selling and administrative expenses

Selling and administrative expenses

Capital expenditures

Capital expenditures

Other purposes:

Income tax

Income tax

Dividends

Dividends

Total cash payments $Total cash payments

$Total cash payments

$Total cash payments

Cash increase or $($decrease$)$

$Cash increase or $($decrease$)$

$Cash increase or $($decrease$)$

Cash increase or $($decrease$)$

Plus cash balance at beginning of month

Plus cash balance at beginning of month

Plus cash balance at beginning of month

Plus cash balance at beginning of month

Cash balance at end of month $Cash balance at end of month

$Cash balance at end of month

$Cash balance at end of month

Less minimum cash balance

Less minimum cash balance

Less minimum cash balance

Less minimum cash balance

Excess or $($deficiency$)$ $Excess or $($deficiency$)$

$Excess or $($deficiency$)$

$Excess or $($deficiency$)$