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

The controller of Bridgeport Housewares Inc. instructs you to prepare a monthly cash budget for the next three months. You are presented with the following budget information:
September October November
Sales $136,000 $166,000 $223,000
Manufacturing costs 57,00071,00080,000
Selling and administrative expenses 48,00050,00085,000
Capital expenditures __54,000
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 $6,000 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 $52,000, marketable securities of $73,000, and accounts receivable of $151,700($32,700 from July sales and $119,000 from August sales). Sales on account for July and August were $109,000 and $119,000, respectively. Current liabilities as of September 1 include $6,000 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 $20,000 will be made in October. Bridgeports regular quarterly dividend of $6,000 is expected to be declared in October and paid in November. Management desires to maintain a minimum cash balance of $51,000.
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
September October November
Estimated cash receipts from:
$- Select - $- Select - $- Select -
- Select -- Select -- Select -
Total cash receipts $fill in the blank 7721ef03af8efac_9 $fill in the blank 7721ef03af8efac_10 $fill in the blank 7721ef03af8efac_11
Less estimated cash payments for:
$- Select - $- Select - $- Select -
- Select -- Select -- Select -
- Select -
Other purposes:
- Select -
- Select -
Total cash payments $fill in the blank 7721ef03af8efac_26 $fill in the blank 7721ef03af8efac_27 $fill in the blank 7721ef03af8efac_28
$- Select - $- Select -- Select -
- Select -- Select -- Select -
Cash balance at end of month $fill in the blank 7721ef03af8efac_37 $fill in the blank 7721ef03af8efac_38 $fill in the blank 7721ef03af8efac_39
- Select -- Select -- Select -
Excess or (deficiency) $fill in the blank 7721ef03af8efac_44 $fill in the blank 7721ef03af8efac_45 $fill in the blank 7721ef03af8efac_46
Question Content Area
2. On the basis of the cash budget prepared in part (1), what recommendation should be made to the controller?
The budget indicates that the minimum cash balance
be maintained in November. 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 September and October, the cash balance will
the minimum desired balance.

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