Use the following information to prepare determine the budgeted cash balance for

Question

Use the following information to prepare determine the budgeted cash balance for Arbor Company at the end of June.

a. Beginning cash balance on June 1 is $52,000.

b. Cash receipts from sales: 40% is collected in the month of sale, 50% in the next month, and 10% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: April (actual), $1,450,000, May (actual), $1,600,000, and June (budgeted), $1,700,000.

c. Payments on merchandise purchases: 80% in the month of purchase and 20% in the month following purchase. Purchases amounts are May (actual), $830,000; and June (budgeted), $867,000.

d. Budgeted cash disbursements for salaries in June: $260,000. Salaries payable on May 31 are $60,000

e. Budgeted depreciation expense for June: $24,000.

f. Other cash expenses budgeted for June: $282,000..

Explanation / Answer

Calculation of Cash balance at the end of the June Cash Balance as on June 1 52000 April May June Sales 1450000 1600000 1700000 Cash Received (1700000*40%) 680000 (1600000*50%) 800000 (1450000*10%) 145000 Total 1625000 Payment Purhases 830000 867000 Payments (867000*80) 693600 (830000*20%) 166000 Total 859600 Op Cash 52000 Received 1625000 Payments -859600 Salaries Paid -260000 Other Cash Expenses -282000 Cash balance at the end of June 275400

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