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 $$20,000$ will be made in October. Bridgeport$$s 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 $7721$ef$03$af$8$efac$\_9$ $fill in the blank $7721$ef$03$af$8$efac$\_10$ $fill in the blank $7721$ef$03$af$8$efac$\_11$

Less estimated cash payments for:

$$-$ Select $-$ $$-$ Select $-$ $$-$ Select $-$

$-$ Select $--$ Select $--$ Select $-$

$-$ Select $-$

Other purposes:

$-$ Select $-$

$-$ Select $-$

Total cash payments $fill in the blank $7721$ef$03$af$8$efac$\_26$ $fill in the blank $7721$ef$03$af$8$efac$\_27$ $fill in the blank $7721$ef$03$af$8$efac$\_28$

$$-$ Select $-$ $$-$ Select $--$ Select $-$

$-$ Select $--$ Select $--$ Select $-$

Cash balance at end of month $fill in the blank $7721$ef$03$af$8$efac$\_37$ $fill in the blank $7721$ef$03$af$8$efac$\_38$ $fill in the blank $7721$ef$03$af$8$efac$\_39$

$-$ Select $--$ Select $--$ Select $-$

Excess or $($deficiency$)$ $fill in the blank $7721$ef$03$af$8$efac$\_44$ $fill in the blank $7721$ef$03$af$8$efac$\_45$ $fill in the blank $7721$ef$03$af$8$efac$\_46$

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.