Yourock Inc. has provided budget assumptions listed below for January through March 2020. 1. Sales are budgeted for January at 10,000 units at $50 per unit. Subsequent months sales will increase incrementally by 2,000 units per month. 2. Cash Receipts: a. Cash sales are 20% of total cash receipts and are collect in the month of sale. b. Sales on account are 80% of total cash receipts and are collected as follows: 30% in the month of sales and the balance in the subsequent month. C. Accounts receivable balance - Dec 2019 - $10,000 3. Cash payments - purchases of materials are on account and full payment is made in the following month a Direct materials purchased - January - $10,000, February - $15,000, March - $10,000 2 b. Direct labor paid - January - $15,000, February - $15,000, March - $15,000 c. Overhead paid - January - $5,000, February - $5,000, March - $5,000 1 d. Sales commission - 10% sales and paid in following month 2 . Other operating expenses - January - $6,000, February - $7,000, March - $8,000 and paid in month incurred 14 4. Accounts payable balance - Dec 2019 - $0 25 26 5. The company requires a minimum $75,000 cash balance. Loans taken to meet this requirement cost 1% interest 27 per month (paid following month). Any excess cash is used to repay loans at month-end. The cash balance 2B on January 11 $128,400, and the company has no outstanding loans 29 20 Instructions: Prepare a sales and cash budget using the information provided. Yourock Inc. Sales Budget For Jan, Feb, Mar Jan Feb Mar Total Budgeted Unit Sales Budgeted Unit Price Total Budgeted Sales Yourock Inc. Cash Budget For Jan, Feb, Mar Jan Feb Mar Beginning cash balance Cash receipts : Cash receipts 5 Receipts - Sales on account AR Collections Total cash available Feb Jan Mar Beginning cash balance Cash receipts : 4 Cash receipts 5 Receipts - Sales on account 16 AR Collections 7 Total cash available 8 59 Cash payments for: 50 Direct materials 51 Direct labor 52 Overhead 63 Sales commissions (10% of sales) 54 Other Operating Expenses 65 Interest on bank loan 66 Preliminary cash balance 67 68 Additional loan from bank 69 Repayment of loan to bank 70 Ending cash balance 71 72 Loan balance, end of month