Complete a cash budget for Hoyt, Inc. Hoyt, Inc. has estimated current year sale
ID: 2437723 • Letter: C
Question
Complete a cash budget for Hoyt, Inc.
Hoyt, Inc. has estimated current year sales (in millions) for the next four quarters.
Q1 $240
Q2 $250
Q3 $205
Q4 $350
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Sales for the 1st quarter next year is projected to be $230.
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Accounts Receivable at the beginning of the year was $100.
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Beginning Accounts Payable were $60.
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The beginning cash balance is $50.
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Hoyt, Inc. cash collection schedule is as follows: 60% of sales in the current
quarter, 40% in the 1st quarter after sales.
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Purchases from suppliers in a quarter are equal to 50% of the next quarter’s
forecasted sales
.
Suppliers are normally paid in 50% in the quarter purchases are made and 50% in the following quarter.
Wages, taxes and other expenses are 20% of current quarter sales
Hoyt, Inc. maintains a minimum cash balance of $30
Explanation / Answer
EXPECTED CASH COLLECTIONS Q-1 Q-2 Q-3 Q-4 YEAR Beginning Accounts receivable 100 100 Quarter-1 Sales 144 96 240 Quarter-2 Sales 150 100 250 Quarter-3 Sales 123 82 205 Quarter-4 Sales 210 210 Total Cash Collections 244 246 223 292 1,005 EXPECTED CASH DISBURSALS Q-1 Q-2 Q-3 Q-4 YEAR Budgeted Purchase in $ 125 102.5 175 115 Beginning Accounts payable 60 60 Quarter-1 Purchase 62.5 62.5 125 Quarter-2 Purchase 51.25 51.25 102.5 Quarter-3 Purchase 87.5 87.5 175 Quarter-4 Purchase 57.5 57.5 Total Cash Disbursals 122.5 113.75 138.75 145 520 CASH BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Beginning Balance 50 124 206 249 50 Add: Receipt Cash Collections-as computed above 244 246 223 292 1,005 Total Cash available 294 370 429 541 1,055 Payments: Cash disbursement-as computed above 122.5 113.75 138.75 145 520 Labour cost 48 50 41 70 209 Total Disbursals 170.5 163.75 179.75 215 729 Excess/Deficit 124 206 249 326 326 Borrowings 0 0 0 0 0 Ending balance 124 206 249 326 326
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