Use the following information to prepare the July cash budget for Acco Co. It sh

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.

Cash receipts from sales: 10% is collected in the month of sale, 50% in the next month, and 40% in the second month after sale (uncollectible accounts are negligible and can be ignored). Sales amounts are: May (actual), $1,710,000; June (actual), $1,220,000; and July (budgeted), $1,540,000.

Payments on merchandise purchases: 65% in the month of purchase and 35% in the month following purchase. Purchases amounts are: June (actual), $490,000; and July (budgeted), $520,000.

Bank loan interest due in July: $9,000.

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.

Explanation / Answer

ACCO COMPANY Acco Company Schedule of expected cash collections Months Sales May June July MAY SALES $               1,710,000.00 $                                684,000.00 JUNE SALES $               1,220,000.00 $                                610,000.00 JULY SALES $               1,540,000.00 $                                154,000.00 Total Cash collections $               4,470,000.00 $                        -   $                   -   $                            1,448,000.00 Acco Company Budgeted Cash disbursement of Mercendise Purchase Months Total Purchases June July July 31st , Accounts Payable JUNE PURCHASE $                  490,000.00 $ 171,500.00 JULY PURCHASE $                  520,000.00 $ 338,000.00 $                                182,000.00 $                                                 -   Total Cash Payments $               1,010,000.00 $                        -   $                                182,000.00 Acco Company Cash Budget For the months ending July 31st Months April Cash Balance $                     72,000.00 Add: Collections from customer $               1,448,000.00 Total Cash available $               1,520,000.00 Less: Disbursement Mercendise Purchase $                  182,000.00 Salaries $                  150,000.00 Other Expenses $                  150,000.00 Accrued Taxes $                     50,000.00 Interest on bank loan $                       9,000.00 Total Cash Disbursement $                  541,000.00 Ending   Cash Balance $                  979,000.00

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