Use the following information to prepare the July cash budget for Acco Co. It sh
ID: 2468393 • Letter: U
Question
Use the following information to prepare the July cash budget for Acco Co. It should show expected cash receipts and cash disbursements for the month and the cash balance expected on July 31. a. Beginning cash balance on July 1: $72,000. b. Cash receipts from sales: 15% is collected in the month of sale, 50% in the next month, and 35% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,760,000; June (actual), $1,260,000; and July (budgeted), $1,370,000. c. Payments on merchandise purchases: 80% in the month of purchase and 20% in the month following purchase. Purchases amounts are: June (actual), $440,000; and July (budgeted), $600,000. d. Budgeted cash disbursements for salaries in July: $360,000. e. Budgeted depreciation expense for July: $14,000. f. Other cash expenses budgeted for July: $210,000. g. Accrued income taxes due in July: $50,000. h. Bank loan interest due in July: $10,000.
Explanation / Answer
Cash Budget for July $ $ Opening Balance of Cash 72,000 Add:- Collection Cash Sales (15% of July Month's Sale) (15% X 1370000) 2,05,500 Collection from Account Receivable (50% of June Month's Sale) (50% X 1260000) 6,30,000 Collection from Account Receivable (35% of May Month's Sale) (35% X 1760000) 6,16,000 14,51,500 Total Cash 15,23,500 Less:- payment Purchases- Cash (80% of July Purchases) (80% X 600000) 4,80,000 Payment to Account payable (20% of June Purchase) (20% X 440000) 88,000 5,68,000 Salaries 3,60,000 Depreciation - Other Cash Expenses 2,10,000 Accured Income tax Expenses 50,000 Bank Loan Interest 10,000 6,30,000 Total Payment 11,98,000 Expected Cash for July-end 3,25,500
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