Quetions is that : Bernard wants to see how the company is doing prior to starti
ID: 2402130 • Letter: Q
Question
Quetions is that : Bernard wants to see how the company is doing prior to starting the month of December. Prepare a cash budget for the months of September, October, and November and for the three-month period in total (the period begins on September 1). Providing a supporting schedule of cash collections.
Thing is that I knew the answer, please check the following table, but I don't know how to get the answer. Can you please tell me how to calculate those data? thank you so much!
bFor Accounts Payable taken from the balance sheet developed in Requirement 1.
c$5,000 × 0.09 × (2/12) (beginning of September to end of October).
dIncludes minimum cash balance of $10,000.
I have no idea how they were calculated, please advise, thanks u!
OBJECTIVE3 Problem 8.37 Cash Budget, Pro Forma Balance Sheet Bernard Creighton is the controller for Creighton Hardware Store. In putting together the cash budget for the fourth quarter of the year, he has assembled the following data a. Sales July (actual) August (actual) September (estimated) October (estimated) November (estimated) December (estimated) $100,000 120,000 90,000 100,000 135,000 150,000 b. Each month, 20 percent of sales are for cash, and 80 percent are on credit. The collection pattern for credit sales is 20 percent in the month of sale, 50 percent in the following month, and 30 percent in the second month following the sale. c. Each month, the ending inventory exactly equals 40 percent of the cost of next month's sales. The markup on goods is 33.33 percent of cost. Inventory purchases are paid for in the month following purchase Recurring monthly expenses are as follows d. Salaries and wages Depreciation on plant and equipment Utilities Other $10,000 4,000 1,000 1,700 (continued)Explanation / Answer
Given margin on sales = 33.33% on cost. Given cost is x, then cost of sales =.3333x Selling price=x+.3333x x=selling price * 1/1.3333 =75%. of selling price. margin on sales=75%*.3333=25%. Answer for question no.1: Particulars Assets Liabilities Remarks Cash(balancing figure) $10,200.00 Accounts receivable $100,800.00 July receivables is 30% of 80% of sales and August receivbles is 80% of 80% of 120000 Inventory $27,000.00 40% of cost of sales of september Plant and equipment $431,750.00 Accounts payable $81,000.00 Purchases of August Common stock $220,000.00 Retained earnings $268,750.00 Total $569,750.00 $569,750.00 Answer for question no.2: Cash collections budget is as follows: Particulars July August September October November Accounts receivables at the end of November Sales (A) 100000 120000 90000 100000 135000 Cash sales(B)=20% of A 20000 24000 18000 20000 27000 Credit sales(C )=80% of A 80000 96000 72000 80000 108000 Collections from debtors 20% in the month of Sale(D)=20%*(C ) 16000 19200 14400 16000 21600 50% in next month(E )=50% *(C ) 40000 48000 36000 40000 54000 30% in the second month following sale(F)=30%*(C ) 24000 28800 21600 24000 Cash from sales(G)=(B)+(D)+(E )+(F) 36000 83200 104400 100800 110200 78000 Cash payment to purchases budget and account payable as follows: Particulars July August September October November December Accounts receivables at the end of November Sales (A) 100000 120000 90000 100000 135000 150000 Cost of sales(b) =75% of (A) 75000 90000 67500 75000 101250 112500 Closing stock(C ) (40% of next month cost of sales) 36000 27000 30000 40500 45000 Opening stock (D)=Previous month closing stock 36000 27000 30000 40500 45000 Purchases (E )=(B)+(C )-(D) 81000 70500 85500 105750 Payment for purchases 81000 70500 85500 105750 This is accounts payable for november Cash budget is as follows: Particulars September October November Opening balance $10,200.00 $10,900.00 $17,462.50 Add: Cash collections $104,400.00 $100,800.00 $110,200.00 Total cash available $114,600.00 $111,700.00 $127,662.50 Minus: Payments payment to creditors $81,000.00 $70,500.00 $85,500.00 Salaries and wages $10,000.00 $10,000.00 $10,000.00 Utilities $1,000.00 $1,000.00 $1,000.00 Other $1,700.00 $1,700.00 $1,700.00 Property taxes $15,000.00 advertising $6,000.00 Lease payment $5,000.00 Total payments $108,700.00 $89,200.00 $103,200.00 Balance in hand $5,900.00 $22,500.00 $24,462.50 Interest payment and principal payment $5,037.50 Miminum balance $10,000.00 Amount to be borrowed $5,000.00 10000-5900=4100 rounded to 5000 Closing balance $10,900.00 $17,462.50
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