Cash Disbursements Assume that Waycross Manufacturing manages its cash flow from

Question

Cash Disbursements
Assume that Waycross Manufacturing manages its cash flow from its home office. Waycross controls cash disbursements by category and month. In setting its budget for the next six months, beginning in July, it used the following managerial guidelines:

Category Guidelines Purchases Pay half in current and half in following month. Payroll Pay 80 percent in current month and 20 percent in following month. Loan Payments Pay total amount due each month. Predicted activity for selected months follow Category May June uly August $30,000 $42,000 $52,000 $52,000 100,000 110,000 130,000 100,000 Loan Payments 10,000 10,000 14,000 14,000 Payroll Prepare a schedule showing cash disbursements by account for July and August. Waycross Manufacturing Schedule of Cash Disbursements For the Months of July and August July August Accounts payable$ Payroll Loan payments Total

Explanation / Answer

Waycross Manufacturing Schedule of Cash Disbursements

for the months of July and August

Category

July

August

Purchases

$47,000.00

$52,000.00

Payroll

$126,000.00

$106,000.00

Loan Payments

$14,000.00

$14,000.00

Total

$187,000.00

$172,000.00

The calculation is shown below:

Purchases:

Pay half in current and half in following month.

July= Half in July & Half in June

            =$26,000+$21,000=$47,000

Likewise calculate for the two months, category wise following the conditions given in the question.

Category

July

August

Purchases

$47,000.00

$52,000.00

Payroll

$126,000.00

$106,000.00

Loan Payments

$14,000.00

$14,000.00

Total

$187,000.00

$172,000.00

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