Queensland Enterprises needs a cash budget for the month of June. The following

Question

Queensland Enterprises needs a cash budget for the month of June. The following information is available: The cash balance on June 1 is $13,000. Sales for May and June are $40,000 and $50,000, respectively. Cash collections on sales are 45 percent in the month of sale and 50 percent in the month after the sale; 5 percent of sales are uncollectible. General expenses budgeted for June are $20,000 (depreciation represents $1,000 of this amount). Inventory purchases will total $40,000 in May and $30,000 in June. The company pays for half of its inventory purchases in the month of purchase and for the other half the month after purchase. The company will pay $5,000 in cash for office furniture in June. Sales commissions for June are budgeted at $3,000. The company maintains a minimum ending cash balance of $5,000 and can borrow from the bank in multiples of $100. All loans are repaid after 60 days.

Explanation / Answer

Cash Budget

Schedule of Expected Cash Payments Month Detail May June July Aug Beginning AP                -                  -                  -                  -                    -   May                 (40000*0.5)(40000*0.5)     20,000.00     20,000.00                -                  -         40,000.00 June                (30000*0.5)(30000*0.5)                -       15,000.00     15,000.00                -         30,000.00 July                (0*0.5)(0*0.5)                -                  -                  -                    -   Aug                (0*0.5)                -                    -   Total Expected Payments     20,000.00     35,000.00     15,000.00                -         70,000.00

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