Castor. Inc., is preparing ts master budget for the quarter ended June 30. Budge
ID: 2396337 • Letter: C
Question
Castor. Inc., is preparing ts master budget for the quarter ended June 30. Budgeted sales and cash payments for merchandise for the next three months follow: Budgeted May $30,100 $41,9 $25,900 24,000 14,980 15,30e June Sales Cash payments for nerchandise Sales are 75% cash and 25% on credit. All credit sales are collected in the month following the sale. The March 31 balance sheet includes balances of $13.900 in cash, $13,900 in accounts receivable. $11,000 in accounts payable, and a $3,900 balance in loans payable. A minimum cash balance of $13,900 is required. Loans are obtained at the end of any month when a cash shortage occurs Interest is 2% per month based on the beginning of the month loan balance and is paid at each month-end. If an excess balance of cash exists, loans are repaid at the end of the month. Operating expenses are paid in the month incurred and include sales commissions (5% of sales), shipping (2% of sales), office salaries ($4,900 per month), and rent($6.900 per month). Prepare a cash budget for each of the months of April, May, and June. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Round your final answers to the nearest whole dollar.)Explanation / Answer
Cash Budget :-
April
May
June
Beginning Cash Balance
13900
13900
13900
Cash Sale
(30100 * 75%)
=22575
(41900 * 75%)
=31425
(25900 * 75%)
=19425
Credit sale collection
13900
(30100 * 25%)
=7525
(41900 * 25%)
=10475
Total Cash Available
50375
52850
43800
Cash Payment for:
Merchandise
24000
14900
15300
Account Payable
11000
Sales commission
(30100 * 5%)
=1505
(41900 * 5%)
=2095
(25900 * 5%)
=1295
Shipping
(30100 * 2%)
=602
(41900 * 2%)
=838
(25900 * 2%)
=518
Office Salary
4900
4900
4900
Rent
6900
6900
6900
Interest on Loan
(3900 * 2%)
=78
(3900 + 12510) * 2%
=328
(16410 – 8989) * 2%
=148
Total Cash Payment
48985
29961
29061
Preliminary Cash Balance
1390
22889
14739
Additional Loan(Loan Repayment)
12510
(8989)
(839)
Ending Cash Balance
13900
13900
13900
Loan Balance:-
April
May
June
Loan Balance-Beginning of Month
3900
16410
7421
Additional Loan(Loan Repayment)
12510
(8989)
(839)
Loan Balance-End of Month
16410
7421
6582
April
May
June
Beginning Cash Balance
13900
13900
13900
Cash Sale
(30100 * 75%)
=22575
(41900 * 75%)
=31425
(25900 * 75%)
=19425
Credit sale collection
13900
(30100 * 25%)
=7525
(41900 * 25%)
=10475
Total Cash Available
50375
52850
43800
Cash Payment for:
Merchandise
24000
14900
15300
Account Payable
11000
Sales commission
(30100 * 5%)
=1505
(41900 * 5%)
=2095
(25900 * 5%)
=1295
Shipping
(30100 * 2%)
=602
(41900 * 2%)
=838
(25900 * 2%)
=518
Office Salary
4900
4900
4900
Rent
6900
6900
6900
Interest on Loan
(3900 * 2%)
=78
(3900 + 12510) * 2%
=328
(16410 – 8989) * 2%
=148
Total Cash Payment
48985
29961
29061
Preliminary Cash Balance
1390
22889
14739
Additional Loan(Loan Repayment)
12510
(8989)
(839)
Ending Cash Balance
13900
13900
13900
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