P&A Inc. distrubutiors of cars and truck throught West Area in Ayala City, is in
ID: 2459303 • Letter: P
Question
P&A Inc. distrubutiors of cars and truck throught West Area in Ayala City, is in the process of assembling a cash budget for the first quarter of 2015. The following information has been extracted from the company's accounting records:
1. All Sales are on account. 60% of the customers accounts are collected in the month of sales, 35% are collected in the following month. Uncollectibles amounting to 5% of sales are anticipated and management belives that only 20% of the accounts oustanding on December 31,2014, will be recovered and the recovery will be in January 2015.
2. 70% of the merchendise purchases are paid for in the month of purchase, the remaining 30% are paid in the month after the acquisition.
3. The December 31 2014 blance sheet disclosed the following selected figures: Cash, $20,000 account receivable, $ 55,000 and account payable $22,000.
4. P&A maintains a $20,000 minimum cash balance at all times. Financing is avilable (and retired) in $1,000 multiples at an 8% interest rate, with borrowings taking place at the beginning of the month and repayments occuring at the month. Interest is paid at the time of the repaying principal and computed on the portion of principal repaid at that time.
5. Additional data:
Required:
1. Prepare a schedule of cash receipts for January to March and Total Quarter.
2. Prepare a schedule of cash Disbursements for January through March and Total quarter.
3. Prepare a schedule of cash Budget for January through March and total quarter.
January Febuary March Sales Revenue $150,000 $180,000 $185,000 Merchandise Purchase 90,000 100,000 140,000 Cash Operating Cost 31,000 24,000 45,000 Proceeds from sales of equipment --------- --------- 5,000Explanation / Answer
Particulars
January
Febuary
March
Sales Revenue
1,50,000
1,80,000
1,85,000
Merchandise Purchase
90,000
1,00,000
1,40,000
Cash Operating Cost
31,000
24,000
45,000
Proceeds from sales of equipment
5,000
60% in same month
90000
108000
111000
35% in following month
52500
63000
20 % of decmber outstanding
11000
Total Receipt from sales
101000
160500
174000
70% in same month
63000
70000
98000
30% in next month
22000
27000
30000
Total payment for purchase
85000
97000
128000
Cash operating cost
31,000
24,000
45,000
Proceed from sales equipment
5,000
Net cash flow
-15,000
39,500
6,000
Opening cash balance
20000
20000
43,300
Closing min cash balance
20000
20000
Excess/ shortage
-15,000
39,500
Financiang
15000
-15000
Interest payment
-1200
Actual closing balance
20000
43,300
49,300
Particulars
January
Febuary
March
Sales Revenue
1,50,000
1,80,000
1,85,000
Merchandise Purchase
90,000
1,00,000
1,40,000
Cash Operating Cost
31,000
24,000
45,000
Proceeds from sales of equipment
5,000
60% in same month
90000
108000
111000
35% in following month
52500
63000
20 % of decmber outstanding
11000
Total Receipt from sales
101000
160500
174000
70% in same month
63000
70000
98000
30% in next month
22000
27000
30000
Total payment for purchase
85000
97000
128000
Cash operating cost
31,000
24,000
45,000
Proceed from sales equipment
5,000
Net cash flow
-15,000
39,500
6,000
Opening cash balance
20000
20000
43,300
Closing min cash balance
20000
20000
Excess/ shortage
-15,000
39,500
Financiang
15000
-15000
Interest payment
-1200
Actual closing balance
20000
43,300
49,300
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