Wilson\'s Retail Company is planning a cash budget for the next three months. Es
ID: 2451698 • Letter: W
Question
Wilson's Retail Company is planning a cash budget for the next three months. Estimated sales revenue is as follows:
All sales are on credit; 60 percent is collected during the month of sale, and 40 percent is collected during the next month. Cost of goods sold is 80 percent of sales. Payments for merchandise sold are made in the month following the month of sale. Operating expenses total $42,000 per month and are paid during the month incurred. The cash balance on February 1 is estimated to be $30,000.
Prepare monthly cash budgets for February, March, and April.
Use negative signs only with beginning and ending cash balances, when appropriate. Do not use negative signs with disbursement answers.
Month Sales Revenue Month Sales Revenue January $ 300,000 March $ 200,000 February 250,000 April 150,000Explanation / Answer
Cash receipts = cash from sales for both current and previous months
Cash disbursements = payments for COGS and operating expenses
Jan Feb Mar Apr Sales 300,000 250,000 200,000 150,000 Collect at 60% 180,000 150,000 120,000 90,000 Collect at 40% 120,000 100,000 80,000 COGS at 80% 240,000 200,000 160,000 120,000 Payments for COGS 240,000 200,000 160,000 Operating expenses 42,000 42,000 42,000 42,000 Cash balance beginning 30,000 18,000 (4,000) Total cash receipts 270,000 220,000 170,000 cash available 300,000 238,000 166,000 total disbursements 282,000 242,000 202,000 cash balance ending 18,000 (4,000) (36,000)Related Questions
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