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Whitlock, Inc., buys hardware parts from various manufacturers and sells them to retail stores. Management is currently trying to prepare a cash budget for August
Whitlock, Inc., buys hardware parts from various manufacturers and sells them to retail
stores. Management is currently trying to prepare a cash budget for August and has the
following information available:
a The cash balance on August is $
b Actual sales for June and July and projected sales for August are as follows:
June July August
Cash sales $ $ $
Credit sales
Credit sales are collected during the month of sale, during the month
following the sale, and during the second month following the sale.
c Whitlocks actual purchases for June and July and its projected purchases for
August are as follows:
June July August
Cash purchases $ $ $
Credit purchases
All accounts payable are paid in the month following the purchase.
d Total administrative and selling expenses including $ depreciation for
August are expected to be $
e Whitlock expects to pay a $ dividend to stockholders and to purchase, for
cash, a $ piece of land during August.
f Cash on hand should never drop below $
Prepare Whitlocks August cash budget, assuming that the company borrows any
amounts needed to meet its minimum desired balance.
Interpretive Question: What types of expenses other than depreciation would
be excluded from a cash budget?
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